We keep hearing that Citi doesn’t have to worry about losing its depositors because bank deposits are insured by the government. Unfortunately, that’s not quite true.
Citi has something like $773 billion in deposits. Felix Salmon has pointed out that the vast majority of these deposits are not insured by the FDIC. Most are held outside the US, for tax and accounting reasons or because they are accounts owned by foreigners or ex-pats, and are therefore uninsured. Only about $100 billion of its deposit base in FDIC protected.
That means that Citi could certainly suffer a run on the bank if those uninsured depositors freak out about the market seeming to signal major problems with the bank. Is anyone monitoring these deposits? We can’t even figure out whose job that would be. Probably the FDIC’s and the Federal Reserve but they’re not returning our phone calls today. (We suspect because they’re all busy readying a bailout for Citi.)
Here’s the good news. If you are a Citi customer in the US, your money in a savings account is as safe as it can be. That’s exactly what the FDIC is meant to protect. What’s more, the fact that Citi only has around $100 billion in insured accounts is good news for you: the government can easily afford to pay off every single dollar of those deposits. So put on a smilely face!
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