New numbers from the Federal Deposit Insurance Corporation (FDIC) show Americans are pulling their money at a pace not seen in yearly four decades.
According to the FDIC’s newly-released quarterly report, depositors took a total of $472 billion out of their accounts in the first quarter of this year – shattering a 39 year record.
“The quarterly decline is the largest reduction reported in the QBP since data collection began in 1984.
This was the fourth consecutive quarter that the industry reported lower levels of total deposits.”
The “primary driver” of deposit flight came from uninsured deposits, says the FDIC, as people moved to protect capital that is above the $250,000 FDIC insured maximum.
Case in point – the amount of insured deposits held by banks actually increased during the quarter as people diversified their risk.
The mass exodus follows the failures of Signature Bank, Silicon Valley Bank and First Republic, which were triggered in large part by the Federal Reserve’s aggressive interest rate hikes.
As depositors leave the banking system, money market funds have witnessed massive weekly cash inflows.
As the first quarter came to a close, assets held by money market mutual funds surged to $5.6 trillion according to Crane data, representing a record high.
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