Where We Keep Our Money | Top 8 Safest US Banks To Keep Your Money 2024

Summary

This video update for 2024 discusses the top eight safest banks in the US, unchanged from last year, focusing on their status as Global Systemically Important Banks (G-SIBs) which receive more government backing. It explains the five key indicators for bank health, including profitability and capital liquidity, and emphasizes the importance of FDIC insurance and G-SIB status for safety. The video also touches on the low number of bank and credit union failures so far in 2024, suggesting a stable banking environment.

Takeaways

• 🏦 The video discusses the top eight safest banks in the US for 2024, focusing on changes since the previous year's banking crisis.
• 📈 The script outlines five key indicators used to assess bank health: profitability, provisions for loan losses, capital and liquidity, unrealized losses, and credit ratings.
• 🔒 Safety of banks is determined not only by financial metrics but also by government backing, including FDIC insurance and GIP status, which indicates systemic importance.
• 🌐 GIP status is crucial as it signifies that the government will intervene to prevent the bank's failure to protect the broader financial system.
• 🏷️ The list of GIPs is provided by the Financial Stability Board and is updated annually, with banks ranked into buckets based on the additional capital they must hold.
• 🏦 JP Morgan Chase is the only bank in the highest bucket, requiring an extra 2.5% capital, indicating its systemic importance and government backing.
• 🏛️ Bank of America and Citigroup are in the next bucket, requiring an extra 2% capital, followed by Goldman Sachs in the subsequent bucket at 1.5%.
• 🏦 The remaining banks in the list include Bank of New York Mellon, Morgan Stanley, State Street, and Wells Fargo, each requiring an extra 1% capital.
• 📉 The video also covers the current state of bank failures, with only one bank failure in 2024 so far, indicating a stable banking environment.
• 💡 The video concludes by encouraging viewers to consider the safety and other factors like customer service when choosing a bank, and mentions the availability of bond investing courses.

Q & A

What is the main topic of the video?

The main topic of the video is an update on the top eight safest banks in the US for the year 2024, discussing changes since the last year's banking crisis, and providing insights into bank safety.

What are the three main topics covered in the video?

The three main topics covered are: 1) Whether the personal list of the top eight safest banks in the US has changed since last year, 2) The inclusion of other institutions in the list of the safest banks, and 3) What the latest bank and credit union failure numbers indicate.

What are the five important indicators used to determine the health of a bank?

The five important indicators are profitability, provisions for loan and other potential losses, capital and liquidity, unrealized losses, and the bank's credit rating by independent agencies.

What does NIM stand for and what does it represent?

NIM stands for Net Interest Margin, which represents the difference between what a bank pays its depositors and what it charges its loan customers.

What is the role of FDIC insurance in bank safety?

FDIC insurance is a government-backed program that insures deposits up to $250,000 per depositor per insured bank for each account ownership category, providing a safety net for depositors' funds.

What is a GIP and why are they considered safer banks?

A GIP, or Global Systemically Important Bank, is a bank that the government will do everything they can to keep from going under due to its systemic importance to the economy. They are considered safer because of the implicit government backing and stricter regulations they are subject to.

What happened with Credit S in Switzerland in 2023?

In 2023, Credit S in Switzerland experienced a bank run with customers withdrawing their deposits rapidly. The Swiss government and National Bank intervened by providing emergency liquidity and facilitating a takeover by UBS to prevent a global financial crisis.

Which bank holds the top position in terms of additional capital required and why is this significant?

JP Morgan Chase holds the top position in terms of additional capital required, which is significant because it indicates that it should be most able to manage financial losses and external shocks due to its higher capital reserves.

How does the ownership of Merrill Edge and E*TRADE relate to the safety of these institutions?

Merrill Edge is owned by Bank of America and E*TRADE is owned by Morgan Stanley, both of which are GIPs. This implies that if these subsidiaries face financial difficulties, their parent companies, with deeper pockets and GIP status, would be there to support them, providing implicit government backing.

What is the current status of bank and credit union failures in the US as of the video's recording?

As of the video's recording, there has been only one bank failure in 2024, Republic First Bank, and one credit union in conservatorship, First Choice Credit Union. Both failures were relatively small and the deposits and assets were taken over by other institutions, ensuring no loss to depositors.

What does the video suggest about the safety of larger banks in the current financial environment?

The video suggests that in the current environment, larger banks, particularly GIPs, are considered safer due to their greater resources, risk management experience, capital reserves, and the implicit government backing they receive.