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About This Event
This market will resolve to "Yes" if any US bank fails between this market's creation and the listed date 11:59 PM ET (according to the FDIC's "Failed Bank List"). Otherwise, this market will resolve to "No."
For this market to resolve to "Yes", the bank's closing date as listed by the FDIC must be within this market's above-specified timeframe. If there is a potential bank failure within this market's timeframe and the FDIC "Failed Bank List" has not been updated yet, this market may remain op
AI-generated analysis based on market data. Not financial advice.
This prediction market topic concerns whether any US bank will fail between the market's creation date and January 31, 11:59 PM ET, as determined by the Federal Deposit Insurance Corporation's official 'Failed Bank List'. A bank failure occurs when a financial institution is unable to meet its obligations to depositors and creditors, typically leading to its closure by a federal or state regulator and subsequent takeover by the FDIC. The FDIC's list is the definitive record, and the resolution depends on the bank's closing date appearing on that list within the specified timeframe. This market directly measures perceived systemic risk and confidence in the US banking sector over a defined period. Interest in this topic surged dramatically following the high-profile collapses of Silicon Valley Bank, Signature Bank, and First Republic Bank in March 2023, which represented the second, third, and fourth largest bank failures in US history. These events shattered a period of relative stability and refocused attention on vulnerabilities related to interest rate risk, uninsured deposit concentrations, and the speed of bank runs in the digital age. Market participants, including investors, economists, and policymakers, monitor this metric as a real-time barometer of financial stress, regulatory effectiveness, and the potential for contagion within the broader economy.
Historical Context
Bank failures have been a recurring feature of the US financial landscape, with their frequency and severity often signaling broader economic distress. The most catastrophic period was the Great Depression, when over 9,000 banks failed between 1930 and 1933, leading to the creation of the FDIC in 1933 to restore trust. The Savings and Loan Crisis of the 1980s and early 1990s resulted in the failure of 1,043 thrifts, costing taxpayers an estimated $132 billion and prompting major financial reforms. The modern era saw a significant lull after the passage of the Dodd-Frank Act in 2010, which imposed stricter regulations on large banks. From 2011 through 2022, only 27 banks failed, a stark contrast to the 157 failures in 2010 alone during the fallout from the 2008 Global Financial Crisis. The collapses of Silicon Valley Bank and Signature Bank in March 2023 broke this decade-long calm. These were not isolated incidents of fraud or mismanagement but systemic events driven by a rapid rise in interest rates that eroded the value of long-term securities held by banks, coupled with a concentrated, tech-focused depositor base that withdrew funds en masse via digital channels. This historical pattern shows that failures often cluster during periods of sharp economic transition or policy shifts, making the current high-interest-rate environment a key risk factor.
Why It Matters
The prospect of a US bank failure matters profoundly because it threatens the core infrastructure of the economy. Banks are not just repositories for savings, they are the primary mechanism for credit creation, facilitating everything from small business loans and mortgages to corporate financing. A single failure can trigger a loss of confidence that spreads to other institutions, potentially freezing lending and precipitating a broader economic contraction. This contagion risk is why regulators often intervene dramatically, as seen in 2023. The social impact is direct and severe. Uninsured depositors, often including small businesses, nonprofits, and municipal entities, can lose access to essential operating funds. Employees of the failed bank face job loss, and communities served by that bank can see local credit dry up. Politically, bank failures become lightning rods for debates over regulatory competence, the adequacy of deposit insurance, and the perceived moral hazard of government bailouts. The resolution of each failure also tests the limits of the FDIC's Deposit Insurance Fund, which is financed by premiums paid by banks, not taxpayers. A cluster of failures could strain this fund, potentially requiring a special assessment on the industry or, in a worst-case scenario, a congressional appropriation, with significant political and economic ramifications.
Current Status
As of late 2023 and early 2024, the US banking system has stabilized from the acute crisis of March 2023, but underlying pressures persist. The FDIC reported a slight decline in industry profits in the third quarter of 2023, driven by higher expenses for deposit insurance and rising funding costs. Regulators, including the Federal Reserve and FDIC, have proposed and are implementing stricter capital requirements for larger banks, known as the 'Basel III Endgame' rules, and have signaled tighter supervision of interest rate and liquidity risk management, particularly for banks with assets between $100 billion and $250 billion. The market is closely watching the performance of regional banks with significant commercial real estate exposure, as higher interest rates and shifts in post-pandemic work patterns pressure that sector. No banks failed in the latter half of 2023, but the FDIC's quarterly reports continue to highlight the challenge of unrealized losses on balance sheets.
Frequently Asked Questions
What happens to my money if my bank fails?
If your bank is FDIC-insured and fails, the FDIC typically arranges for another institution to assume the failed bank's deposits or pays depositors directly. Insured deposits, up to $250,000 per depositor, per bank, for each account ownership category, are protected and usually accessible within one business day. Uninsured deposits may be recovered partially or in full depending on the sale of the failed bank's assets.
How often does the FDIC update its Failed Bank List?
The FDIC updates its Failed Bank List in near real-time when a bank failure occurs. The list is the official record and includes the bank's name, city, state, certification number, closing date, and the assuming institution (if any). For the purposes of prediction market resolution, the closing date on this list is the definitive timestamp.
What was the last US bank to fail before 2023?
The last bank failure before the March 2023 crisis was Almena State Bank in Almena, Kansas, which failed on October 23, 2020. This 28-month gap without a failure highlighted the period of stability that was abruptly ended by the collapses of Silicon Valley Bank and Signature Bank.
What causes a bank to fail?
Banks typically fail due to a combination of insolvency and illiquidity. Insolvency occurs when a bank's liabilities exceed its assets, often due to large loan losses or a collapse in the value of its securities. Illiquidity happens when the bank cannot meet immediate withdrawal demands, even if it is technically solvent, which can trigger a regulatory closure.
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Updated Jan 15, 2026
Educational content is AI-generated and sourced from Wikipedia. It should not be considered financial advice.
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