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Almost 50% of Americans say they worry about their money being safe with a bank as shares of regional lenders plunge amid deposit outflows

A bank teller using a cash counting machine counting dollar bills in a bank branch.Americans have been pulling money from regional banks this year.

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  • Nearly half of Americans are worried about the safety of their cash in banks and other financial institutions, Gallup said Thursday. 
  • That includes 19% who are “very” worried and 29% who are “moderately” worried.
  • But 20% said they were “not worried at all” about their cash, and 30% considered themselves “not too worried.” 

The first collapse and regulatory seizures of American banks since the global financial crisis ignited the outflow of trillions of dollars from small and mid-sized lenders, and that anxiety is showing up in a new poll from Gallup. 

According to findings from Gallup released Thursday, 48% of adults in the US said they’re concerned about the safety of their money in banks and other financial institutions. That includes 19% who were “very” worried and 29% who were “moderately” worried. 

Gallup last polled Americans about their level of worry about money parked in banks in 2008, after the collapse of Lehman Brothers. The current rate of concern is at similar levels found 15 years ago. 

Not everyone is nervous about their banks now. Gallup found 20% of respondents to its telephone survey were “not worried at all” about their cash, and 30% considered themselves “not too worried.” 

The study was conducted throughout April after Silicon Valley Bank and Signature Bank imploded in March. The Federal Deposit Insurance Corp. took over those companies to stave off a potential run on banks after SVB’s bond-portfolio losses spurred fears about the bank’s viability and uninsured deposits. The FDIC covered all depositors at SVB and Signature, even those over its $250,000 account limit. 

But bank contagion fears have re-emerged. This month, the FDIC seized struggling lender First Republic Bank and the bulk of its assets were sold to JPMorgan.

The Federal Reserve, while raising rates for a 10th straight time, said Wednesday the country’s banking system was “sound and resilient.” But its message didn’t soothe those trading regional bank stocks on Thursday. 

Regional bank stocks plunged, with PacWest Bancorp sliding nearly 50% following a Bloomberg report the Beverly Hills-based lender is weighing strategic options, including a breakup or a sale to a larger rival.

PacWest’s recent update showed its deposit base increased in recent months, but the stock remains down by more than 80% in 2023. 

JPMorgan in late March said around $1 trillion in deposits had been withdrawn from the “most vulnerable US banks” since the Federal Reserve began raising interest rates last year, with half of that amount coming out after SVB blew up.

A graphic shows the level of worry among Americans about safety of money in banks.A graphic shows the level of worry among Americans about safety of money in banks.

Gallup

Read the original article on Business Insider