Your main protection against bank failures is the Federal Deposit Insurance Corporation (FDIC), which was set up in 1933. During the Great Depression over a third of US banks failed, and many people lost everything they’d saved. FDIC’s goal was to make sure that, in future bank failures, even if people lost money they wouldn’t be completely wiped out. 8 Ways to Protect Yourself From Bank Failures The way it works is that if a bank collapses, everyone who didn’t manage to get their money out of it on its way down will have their lost funds replaced by FDIC, up to a maximum of $250,000.