Question 1

How often do banks fail?

Accepted Answer

In a good year, zero. In a bad year, hundreds. The long-run average since 1934 is about forty-six failures a year, but the distribution is lumpy. In 1988 and 1989, during the savings-and-loan crisis, more than two hundred banks failed each year. In 2010, coming off the financial crisis, the FDIC resolved 157 banks in twelve months. Then there were entire stretches, most of 2006, most of 2018 to 2022, when not a single FDIC-insured institution failed. The headline number is a terrible predictor of whether anything is wrong. The shape of who is failing is the signal. A handful of small community banks in one state is one thing. A few multibillion-dollar names in six weeks is a different thing entirely.

Question 2

What causes a bank run?

Accepted Answer

A run is not about solvency. It is about sequencing. A bank lends out most of what you deposit, which means it does not have all the cash in the vault at any given moment. That is fine as long as everyone does not want their money back at the same time. The moment a meaningful share of depositors decides they want out, the bank has to sell assets quickly to cover the withdrawals, and quick sales are the worst kind, especially for long-dated assets like Treasuries that dropped in price because rates went up. The selling produces realized losses, the losses spook more depositors, the line at the door gets longer, and a bank that was solvent on Tuesday is insolvent by Friday. The run is the cause. The underlying numbers usually could have survived a slower exit.

Question 3

What is a systemically important bank?

Accepted Answer

A systemically important bank, or SIFI, is one large enough and interconnected enough that its failure would create unacceptable damage to the broader financial system, not just to its own depositors. The Dodd-Frank era formalized the label: banks over fifty billion in assets face stricter capital rules, more frequent stress tests, and living-will requirements that spell out in advance how they would be wound down without a taxpayer bailout. Globally systemically important banks, the G-SIBs, get an additional capital surcharge. The list is small and public. The whole point of the designation is that these banks are known to be special, so when one looks shaky the response is not improvised.

Question 4

What is too big to fail?

Accepted Answer

Too big to fail is the informal version of systemically important: the observation that when a sufficiently large bank is about to collapse, the government will step in rather than let it take the rest of the system with it. The 2008 bailouts made the phrase famous. The post-crisis regulatory reforms were built specifically to make the phrase less true, by requiring big banks to hold more capital and to pre-plan their own orderly wind-down. The honest answer is that the policy is better than it was in 2008 and not as good as the rules on paper suggest. Markets still price a quiet subsidy into the funding costs of the largest banks. The subsidy is smaller than it used to be, and not zero.

Question 5

How is Silicon Valley Bank failure different from 2008?

Accepted Answer

Different disease. 2008 was a solvency crisis: banks owned trillions of dollars of mortgage-linked assets that turned out to be worth a lot less than the balance sheets said, because the underlying housing collateral was rotten. You could not fix it by lending the banks more cash. You had to take losses. 2023, with Silicon Valley Bank and Signature and First Republic, was a liquidity crisis dressed up in solvency's clothes. The banks owned Treasuries and mortgage-backed securities issued by the federal government, which are about as safe as assets get. They bought those bonds at low yields, then rates spiked, and the bond prices fell. Held to maturity, the bonds would have paid back at par. Sold in a hurry to cover deposit outflows, they crystallized huge losses. Different diseases, different cures. 2008 needed capital. 2023 needed a backstop that let the banks hold the assets rather than fire-sale them.

Bank	Location	Fail date	Assets	Resolution
METROPOLITAN CAPITAL B&T	Chicago, IL	Jan 30, 2026	$261M	Purchase & Assumption
SANTA ANNA NATIONAL BANK	Santa Anna, TX	Jun 27, 2025	$77M	Payout, insured deposits
PULASKI SAVINGS BANK	Chicago, IL	Jan 17, 2025	$49M	Purchase & Assumption
FIRST NB OF LINDSAY	Lindsay, OK	Oct 18, 2024	$108M	Payout, insured deposits
REPUBLIC BANK	Philadelphia, PA	Apr 26, 2024	$5.9B	Purchase & Assumption
CITIZENS BANK	Sac City, IA	Nov 3, 2023	$60M	Purchase & Assumption
HEARTLAND TRI-STATE BANK	Elkhart, KS	Jul 28, 2023	$139M	Purchase & Assumption
FIRST REPUBLIC BANK	San Francisco, CA	May 1, 2023	$213B	Purchase & Assumption
SIGNATURE BANK	New York, NY	Mar 12, 2023	$110B	Purchase & Assumption
SILICON VALLEY BANK	Santa Clara, CA	Mar 10, 2023	$209B	Purchase & Assumption
ALMENA STATE BANK	Almena, KS	Oct 23, 2020	$66M	Purchase & Assumption
FIRST CITY BANK OF FLORIDA	Fort Walton Beach, FL	Oct 16, 2020	$137M	Purchase & Assumption
THE FIRST STATE BANK	Barboursville, WV	Apr 3, 2020	$152M	Purchase & Assumption
ERICSON STATE BANK	Ericson, NE	Feb 14, 2020	$101M	Purchase & Assumption
CITY NATIONAL BANK OF NEW JERSEY	Newark, NJ	Nov 1, 2019	$121M	Purchase & Assumption

When a bank fails, what actually happens.

The warning signs show up in the call reports.

Bank failures, answered.

When a bank fails, what actually happens.

The warning signs show up in the call reports.

Bank failures, answered.

Get the briefing in your inbox.