The Truth About South Carolina’s Banks

By Lloyd I. Hendricks – South Carolina Bankers Association

Everyone knows fear can make a person do strange things. Watching the Dow Jones Industrial Average plunge is enough to set anyone’s nerves on edge. Amid the financial and political fallout, there is one thing that is easy to understand: South Carolina banks are safe and sound and they are still the best place for all your financial needs.
With every passing newsbyte, we wonder how closely we, the citizens of a small Southern state with our Main Street businesses and busy lives, are linked to Wall Street’s catastrophes. Well, we are close to crisis levels, but your deposits in commercial banks are more secure than much of the media will have you believe.
In that spirit, I would like to offer you facts about the state of our state’s banking system that I hope you will find both informative and reassuring.
Fact. The vast majority of America’s and South Carolina’s banks are highly capitalized. What does that mean? It means the industry has a cushion of about $1.3 trillion that stands as a backstop against possible losses, making the possibility of anyone’s bank being taken over by the FDIC remote.
Fact. Your bank deposits now are FDIC-insured for $250,000, and there are legal and safe ways to get even more FDIC coverage depending on how you set up your accounts. No FDIC-insured depositor has ever lost a penny.

Fact. Banks pay premiums to provide FDIC insurance for their customers. The fund that guarantees bank customers’ deposits is completely, 100-percent funded by private banks – not by the government, not by taxpayers.
Fact. Most of the turmoil involves large institutions (Fannie Mae, Freddie Mac, Lehman Brothers, AIG) that are NOT BANKS. And while Washington Mutual, which was recently closed and then acquired by JP Morgan Chase, was a bank, the transaction was a seamless one that protected all deposits – even amounts above the limit.
American commercial banks are among the most highly regulated in the world. The current crisis should force reforms on the less regulated mortgage brokers and on Wall Street. The South Carolina Bankers Association will push for that and you should insist on it too.
Ask your banker if you have questions. Many SC institutions have been around since before the Great Depression and have witnessed Americans’ resiliency. In crises, Americans pull together. We’ve been through tough times before and we’ll get through this again.
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