You need to help me a bit with this: Did Greece or Cyprus have bank deposit insurance and did depositors who’s deposit were covered by the insurance lose principal? My research says no insured deposits were lost. There were capital controls that limited withdrawals but no money lost.

We have had a big bank fail (Lehman Brothers during the Great Recession) . Lehman Brothers did not get bailed out. It was allowed to fail. Depositors did not lose money, uninsured cash accounts did not lose money.

The way that the FDIC handles failed banks is to pay another bank to take-over the failed bank’s obligations. The FDIC failed bank list has more than 500 entries for that last 20 years.

The FDIC doesn’t bail out banks they make sure that insured depositors don’t lose principal. We have had a few economic shocks and no insured depositor has lost money.

Of course if you don’t trust the deposit insurance you could put hundreds of thousands of dollars in a safe. I am not yet panicked enough to do that.

TEK