The recent closure of the First National Bank of Lindsay in Oklahoma has left many large customers with potentially millions of dollars in uninsured deposits at risk, according to the Federal Deposit Insurance Corporation (FDIC). The agency has stated that at least $7.1 million in accounts at the bank exceeded the $250,000 insurance coverage limit set by the FDIC.
Currently, the FDIC is allowing customers to access 50% of these uninsured deposits, although this percentage may change as the agency sells off the failed bank’s assets. This news serves as a reminder that balances above the insurance limit can indeed be lost, despite previous instances of full reimbursement for uninsured depositors in other bank failures.
The FDIC’s $250,000 insurance cap was put to the test during the collapse of Silicon Valley Bank, Signature Bank, and First Republic Bank last year, as well as the failure of Republic First Bank this year. In a historic move, the federal government protected all deposits at the first two banks through a combination of FDIC insurance and an extraordinary use of the systemic risk exception, which allowed the FDIC, Federal Reserve, and Treasury Department to backstop everything.
In contrast, the subsequent bank failures saw the acquisition of the failed banks by rival institutions, with all assets, including uninsured deposits, being assumed. Regulators attribute the shutdown of First National Bank of Lindsay to the discovery of false and deceptive bank records, indicating potential fraud that depleted the bank’s capital.
As the situation unfolds, customers are encouraged to stay informed and vigilant about their deposits. To stay updated on developments in the banking industry and other financial news, consider subscribing to email alerts from reputable sources. Additionally, following trusted platforms on social media can provide real-time updates and insights. Remember to always prioritize the security of your financial assets and seek guidance from professionals if needed.