# What happens to the money over the FDIC limit when a bank fails?

I had about \$4-5K at Countrywide Financial and when it became bankrupt. I recovered all my money thanks to the FDIC. I didn't encounter any problems when recovering the money, but that was probably because I was far under the FDIC limit.

I wonder what would have happened to my deposit if it had been above the FDIC limit of \$250K. If I had \$300K in deposits when the bank failed, would I have lost \$50K? If the FDIC recovers the bank's assets, will those assets be used to pay depositors who were above the FDIC limit?

• – Flux
Commented Aug 29, 2020 at 21:18
• You may want to edit or question a little (e.g. more focus) to prevent it from being closed as a duplicate.
– Flux
Commented Aug 29, 2020 at 21:20
• @flux if possible please edit question for me. English is second language despite living here for 10+ years Commented Aug 29, 2020 at 21:24
• What are you trying to ask? From what I understood, your question is: "What happens to the money over the FDIC limit when a bank fails?". Am I right?
– Flux
Commented Aug 29, 2020 at 21:36
• Edited. I hope I didn't miss anything.
– Flux
Commented Aug 29, 2020 at 21:53

The US Government tries to get another bank to take over the failing bank before it completely collapses. It avoids the situation where the FDIC would have to completely replace the depositors money. The customers of the failing bank become customers of the combined bank. The FDIC only has to address any shortfalls.

Lets say the bank is worth \$900 Million and the total deposits that are either under 250K or maxed out at 250K equals \$875 million and the excess deposits are \$25 Million. Then everybody is made whole.

Now lets say the bank is worth \$900 Million and the deposits that are either under 250K or maxed out at 250K equals \$975 million and the excess deposits are \$25 Million. The FDIC kicks in \$75 million, people who have excess deposits will lose money. When their account is moved to the new bank they will not have all their funds. In your case there will not be \$300K there will be \$250k.

• Unfortunately, this completely ignores the reality that politicians absolutely ignore the rulebook in times of stress. Commented Aug 30, 2020 at 0:39
• Your first paragraph is troublesome. It's FDIC insurance and for depositors whose money has been lost, the FDIC makes the depositor whole not the bank taking over the failed bank. Commented Aug 30, 2020 at 0:56

"When banks fail" is an Extraordinary Circumstance outside of the rulebook.