- Many major bank failures in history have occurred during times of economic decline.
- The U.S. government has created laws to protect banking customers better when banks fail.
- In 2025, only one bank failure has occurred so far.
When a bank can't manage obligations, a federal or state agency will shut it down. Bank failures aren't as common as they were during the Great Depression, and consumers also have more protection in the rare event that one occurs.
Major bank failures in history
To help you get a better understanding of why bank failures happen, we'll briefly go over some of the largest bank failures in U.S. history. We'll also cover laws implemented after these banking crises to better protect bank customers.
Great Depression
The Great Depression had a significant impact on the banking industry. Around 9,000 banks failed during this time.
Many small banks invested their assets in the stock market. When the stock market crashed, panicked bank customers withdrew money to access cash, but the banks didn't have enough cash reserves, so they couldn't maintain business.
Other issues contributed to bank closures, too. A lack of government intervention and insufficient regulation also played an important factor in bank collapses during this period.
Banking customers were negatively impacted during the bank failures because they lost their money if their bank shut down.
Because of the bank failures during the Great Depression, the U.S. created policies to better protect bank customers. The Federal Deposit Insurance Corporation (FDIC) was established in 1933, so it could oversee banks and provide federal insurance for money held in bank accounts.
2008 Financial Crisis
Most bank failures since 2000 are linked to the 2008 financial crisis. Between 2008 and 2015, about 500 bank failures occurred, according to the FDIC.
"The banks had invested in very risky types of investments," said Tom Wheelwright, CPA and CEO of WealthAbility, regarding the bank failures that occurred. "When those derivatives showed that they didn't have value, that's when the banks failed."
Bank customers didn't lose their insured deposits if their bank collapsed. In most instances, the FDIC found banks to acquire all of the deposits, or all excluding certain brokered deposits.
That said, the U.S. government still created new legislation to address some of the issues that caused the 2008 financial crisis. After the Great Recession, the Dodd-Frank Wall Street Reform and Consumer Protection Act became law in 2010.
One of the most notable parts of the Dodd-Frank Act is the Volcker Rule, which prevents banks from owning or investing in certain risky investments (some securities, derivatives, and commodity futures) to get a profit.
2023 bank failures
First Republic Bank, Silicon Valley Bank, and Signature Bank shut down in 2023. There were a total of 5 bank collapses that occurred in 2023, but these three were particularly newsworthy because they were some of the biggest bank failures in U.S. history.
Silicon Valley Bank was the first of the three banks to shut down. It invested a large portion of its funds in Treasury and mortgage bonds, and the bank's portfolio lost a lot of value when interest rates rose.
"There was news about that, and some investors — some big depositors — told everybody, 'You need to pull your money out because the bank is failing,'" says Wheelwright.
Too many people tried to withdraw their money at the same time, and the bank became insolvent — its liabilities exceeded its assets. As a result, the California Department of Financial Protection and Innovation shut down Silicon Valley Bank.
Signature Bank and First Republic Bank collapsed for similar reasons as Silicon Valley Bank. Notably, all three banks had many customers with uninsured deposits.
The FDIC made a system risk exception and protected uninsured deposits for Silicon Valley Bank and Signature Bank to prevent more substantial issues that would affect the entire banking industry. First Republic Bank was quickly acquired by JPMorgan Chase Bank. Any money in First Republic Bank accounts— regardless of the amount — was transferred to Chase Bank.
Government agencies have come together to issue a proposed rule for large banks because of what happened with the Silicon Valley Bank, First Republic Bank, and Signature Bank failures. The proposal states that certain large banks would need to have a certain amount of long-term debt. This would keep large banks dipping into the Deposit Insurance Fund as much and also have the banks take in losses if its shut down.
List of failed banks over the last 5 years
Over the last five years, there have only been 12 bank failures. The following chart provides information on the day these banks were closed, the state where each bank was located, and the institution that acquired the assets of the failed bank. This chart uses FDIC failed bank data, where you can find more information about closed banks.
| Bank Name | State | Acquiring Bank | Day the bank closed |
| Pulaski Savings Bank | IL | Millenium Bank | January 17, 2025 |
| The First National Bank of Lindsay | OK | First Bank and Trust Co., Duncan, OK | October 18, 2024 |
| Republic First Bank | PA | Fulton Bank | April 26, 2024 |
| Citizens Bank | IA | Iowa Trust and Savings Bank | November 3, 2023 |
| Heartland Tri-Star Bank | KS | Dream First Bank | July 28, 2023 |
| First Republic Bank | CA | JPMorgan Chase Bank | May 1, 2023 |
| Signature Bank | NY | Flagstar Bank | March 12, 2023 |
| Silicon Valley Bank | CA | First Citizens Bank and Trust Company | March 10, 2023 |
| Almena State Bank | KS | Equity Bank | October 23, 2020 |
| First City Bank of Florida | FL | United Fidelity Bank | October 16, 2020 |
| The First State Bank | WV | MVB Bank | April 3, 2020 |
| Ericson State Bank | NE | Farmers and Merchants Bank | February 14, 2020 |
Causes of bank failures
Some of the main causes of historic bank collapses include insufficient financial management and poor financial health during economic downturns.
Public perception of a financial institution can also impact a bank negatively. Recent examples, like the collapse of Signature Bank, show that customers may start a bank run if they're concerned about their money.
Impact on the economy
The economic impact of banking crises is often negative, especially if a bank run occurs. Bank closures often influence economic growth and employment declines. It can also impact the way that other banks lend to customers. Smaller banks could make it more difficult for customers to borrow money.
Your money is safe in a bank during a recession as long as it's in an FDIC-insured bank account. As a reminder, bank accounts have a federal insurance limit of $250,000 per depositor per account ownership.
Lessons learned from bank failures
Importance of regulatory oversight
The FDIC was created to oversee banks and protect depositors when a bank fails.
The FDIC will become the "receiver" of the failed bank. The FDIC also offers protection against bank failures and losses. It ensures people still get access to their insured deposits, regardless of what happens to a bank.
Role of deposit insurance
The FDIC insures up to $250,000 per depositor per ownership category. (Similarly, the National Credit Union Administration, or NCUA, insures up to $250,000 per depositor, per ownership category for credit unions.) Any money beyond the $250,000 limit is considered uninsured. This means you might not get all your money if a bank shuts down.
What to do if you're worried about banks shutting down
If you're worried about what happens to your money if your bank fails, it's important to remember that money deposited into bank accounts will be safe as long as your financial institution is federally insured. Up to $250,000 is secure in individual bank accounts.
Some banks also offer extended FDIC insurance, like SoFi and Axos Bank. With enhanced federal insurance coverage, bank accounts can be federally insured for up to millions of dollars. The way it works is the bank has a program where money beyond the maximum FDIC insurance limit is put into FDIC-insured accounts at partner banks.
Michael Collins, a business professor at Endicott College, says that from a deposit perspective, the government is going to step in and make sure that people have access to their insured deposits so they won't lose any of their money.
Wheelwright also recommends finding out where your bank is investing money. Financial institutions with more diversified portfolios tend to have more financial stability and are less likely to fail. Some banks may include information about their investments on their websites.
You could also learn about the different types of loans available at a financial institution, or whether it's received designation as a community development financial institution or eco-friendly bank.
Open an account with enhanced FDIC insurance limits
no monthly service fee
up to 3.80%
$0
up to $300
- FDIC insured up to $3 million
- High interest rate
- Earn a higher interest rate with qualifying activities
- No minimum opening deposit
- No monthly service fees
- Up to $300 bonus with qualifying direct deposit (terms apply)
- Savings tools
- Early direct deposit
- Joint account available
- Declined purchase if you overdraw by more than $50
- Doesn't reimburse out-of-network ATM providers' fees
- May deposit cash at Green Dot locations but there's a $4.95 fee
SoFi Checking and Savings is a great account option if you don't mind keeping your savings and checking in one account.
SoFi® Checking and Savings (Member FDIC)- Sign-up bonus of up to $300. When you sign up and set up direct deposit. Wait for direct deposit to hit account (typically 2-4 weeks). Collect cash bonus of $50 to $300 depending on direct deposit amount
- Up to 3.80% APY with direct deposit or $5,000 or more in qualifying deposits during the 30-day evaluation period
- FDIC Insured and covered up to $3 million in FDIC coverage through a network of participating banks
- 55,000+ fee-free ATMs
no monthly service fee
4.10%
$0
- High APY
- No minimum balance requirements
- No monthly service fees
- Unlimited transfers and withdrawals
- Cash is FDIC insured up to $5 million by partner banks
- No physical locations
- No debit card
- Withdrawals must be to an external bank account or brokerage account
- No phone customer support
- A standard bank offers up to $250,000 of FDIC insurance coverage. We partner with 20 of them so you can get a combined coverage of up to $5M.
- Withdrawing from your high-yield cash account is as easy as making a deposit. There are no fees or limits to how often you can access your cash.
no monthly service fee
4.50%
$1
$30 bonus when you open and fund your new account, plus earn 5.00% APY
- Use as both a savings and checking account
- $1 opening deposit
- No monthly service fees
- FDIC insured up to $8 million for individual Cash Accounts ($16M for joint accounts) through partner banks
- Get paid 2 days early
- Access to a debit card
- Mobile check deposit
- Automatically move extra money into investments with Autopilot
- Save for separate goals in one account
- No physical branch locations
- To deposit cash, pay a fee at a Green Dot location
- $2.50 out-of-network ATM fee
The Wealthfront Cash Account is a solid high-yield checking account. But if you're looking to open a separate savings account, take a look at our best high-yield savings accounts guide.
Wealthfront Cash Account- FDIC insured up to $8 million for individual Cash Accounts ($16M for joint accounts) through partner banks
- 19,000 free ATMs
- Autopilot feature lets you set maximum account balance, and automatically transfers money into investments if you exceed maximum balance by more than $100
- Interest compounded daily, paid monthly
FAQs
The most significant bank failure in U.S. history is the collapse of Washington Mutual. Washington Mutual had approximately $188 billion in deposits.
When a bank collapses, the average person will usually have their money money to a new FDIC-insured bank. However, if the FDIC can't find a bank interested in acquiring a failed institution's deposits, it will send a check of the insured deposits to the person's home.
Government regulation helps keep banks in check by making sure they have proper financial management and maintain good financial health.
Yes, bank failures can still happen today. However, keep in mind that financial institutions are less likely to shut down now than when the Great Depression occurred because the U.S. has implemented stronger regulation and legislation.
In the event of a bank failure, depositors' insured deposits are protected. This means up to $250,000 per depositor, per account ownership category, is safe in savings, checking, money market accounts, or CDs. The FDIC takes control of a bank's assets when it fails and makes sure you have access to your insured deposits as soon as possible.
Currently, only one bank has failed in 2025: Pulaski Savings Bank. The bank was based in Chicago, Illinois. Its assets were acquired by Millenium Bank.
Editorial Note: Any opinions, analyses, reviews, or recommendations expressed in this article are the author’s alone, and have not been reviewed, approved, or otherwise endorsed by any card issuer. Read our editorial standards.
Please note: While the offers mentioned above are accurate at the time of publication, they're subject to change at any time and may have changed, or may no longer be available.
**Enrollment required.
Bonus Disclosure: New and existing Checking and Savings members who have not previously enrolled in Direct Deposit with SoFi are eligible to earn a cash bonus of either $50 (with at least $1,000 total Direct Deposits received during the Direct Deposit Bonus Period) OR $300 (with at least $5,000 total Direct Deposits received during the Direct Deposit Bonus Period). Cash bonus will be based on the total amount of Direct Deposit. Direct Deposit Promotion begins on 12/7/2023 and will be available through 1/31/26. See full bonus and annual percentage yield (APY) terms at sofi.com/banking#1.
APY disclosures: SoFi members who enroll in SoFi Plus with Direct Deposit or by paying the SoFi Plus Subscription Fee every 30 days or with $5,000 or more in Qualifying Deposits during the 30-Day Evaluation Period can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. Members without either SoFi Plus or Qualifying Deposits, during the 30-Day Evaluation Period will earn 1.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Only SoFi Plus members are eligible for other SoFi Plus benefits. Interest rates are variable and subject to change at any time. These rates are current as of 1/24/25. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet. See the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.
Fee Policy: SoFi does not charge any account, service or maintenance fees for SoFi Checking and Savings. SoFi does charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. SoFi's fee policy is subject to change at any time. See the SoFi Checking & Savings Fee Sheet for details at sofi.com/legal/banking-fees/.
Additional FDIC Insurance: SoFi Bank is a member FDIC and does not provide more than $250,000 of FDIC insurance per depositor per legal category of account ownership, as described in the FDIC's regulations. Any additional FDIC insurance is provided by the SoFi Insured Deposit Program. Deposits may be insured up to $3M through participation in the program. See full terms at SoFi.com/banking/fdic/sidpterms. See list of participating banks at SoFi.com/banking/fdic/participatingbanks.
ATM Access: We've partnered with Allpoint to provide you with ATM access at any of the 55,000+ ATMs within the Allpoint network. You will not be charged a fee when using an in-network ATM, however, third-party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFi's ATM policies are subject to change at our discretion at any time.
Early Access to Direct Deposit Funds: Early access to direct deposit funds is based on the timing in which we receive notice of impending payment from the Federal Reserve, which is typically up to two days before the scheduled payment date, but may vary.
Overdraft Coverage: Overdraft Coverage is limited to $50 on debit card purchases only and is an account benefit available to customers with direct deposits of $1,000 or more during the current 30-day Evaluation Period as determined by SoFi Bank, N.A. The 30-Day Evaluation Period refers to the "Start Date" and "End Date" set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the"30-Day Evaluation Period"). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Members with a prior history of non-repayment of negative balances are ineligible for Overdraft Coverage.