Senator Elizabeth Warren Wants to Make Banking 'Boring' Again. Here's Why

Two of American history's three greatest bank failures occurred this year: Signature Bank (SB) and Silicon Valley Bank (SVB). Messy and unexpected, these failures prompted the government to guarantee deposits to prevent bank runs, the banking equivalent of running for the hills.

Senator Elizabeth Warren wants to make banking "boring" again. Banks should be stable. Reliable. Transparent, even. Customers shouldn't worry about their life savings vanishing into the financial ether because some CEO decides to play high-stakes games behind closed doors. According to Warren, banks should prioritize stability over profit.

Since the recent bank failures, Warren has backed or written a few bills to make banks more transparent and reliable. For example, she introduced a bill to reverse Trump-era regulations on medium-sized banks. Under the bill, regional banks like Silicon Valley Bank would be under more government regulation, potentially preventing the collapse of the U.S. banking system.

Will more banks collapse?

More banks may collapse. Historically significant Federal rate hikes were one factor that contributed to the bankruptcy of SB and SVB. Until the Federal Reserve thinks inflation is no major threat, rates will remain high for the foreseeable future.

The fear of collapsing banks has led customers to withdraw from regional banks. Alternatives to these banks include big banks and Bitcoin.

Big banks are highly regulated

Banks with more than $250 billion in deposits are extra regulated by the government (Senator Warren's new bill would bring that number down to $50 billion). This shrinks the likelihood of them suddenly collapsing -- SVB did so practically overnight.

And the potential failure of a massive bank would pressure the government to protect customers first and foremost. That puts large banks like Bank of America in the rarified category of "too big to fail" -- possibly. No financial system is perfect, and there are risks associated with banking, but big banks tend to be among the safest banks in the U.S.

But some consumers have opted out of the U.S. banking system entirely, transmuting a portion of their savings to digital currencies built to be transparent and reliable.

Bitcoin is reliable and transparent

Bitcoin is having a moment. Its price is up over 80% since the start of this year, according to CoinMarketCap data. Ongoing fears of a banking crisis may be partly responsible.

The U.S. government weakly regulates decentralized digital currencies like Bitcoin. To Bitcoin fans, that's not a bug -- it's a feature. Bitcoin is not reliant on the Federal Reserve or any single government to remain functional.

For example, should everyone "make a run" on Bitcoin, most holders would lose money, but the Bitcoin software wouldn't declare bankruptcy. Nor would customers need to rely on the Fed to insure deposits.

This hypothetical Bitcoin run would also be transparent. Concerned Bitcoin owners can check on Bitcoin's reserves at any time, as well as check transactions made with the digital currency. It requires internet access and some specialized know-how, but technically, anyone could do it.

For these reasons, Americans have dipped their toes into digital currencies as an alternative to the U.S. financial system. Some folks have split the difference by investing in digital currencies through centralized exchanges open to government regulation.

Where is the best place to keep your money?

Every financial institution is flawed, but customers do have options. Thanks to government officials like Senator Warren, new rules will circulate the halls of the White House, potentially making banking safer for all customers. The best high-yield savings accounts are stable and offer high returns. And there are a handful of convenient, reasonably safe places to buy Bitcoin.

Another thing to consider is that many banks are FDIC-insured, meaning that deposits of up to $250,000 are safe in the event of bankruptcy. Bank failures mainly impact folks who have over $250,000 stored, which is much higher than the average American's savings.

Consider your risk tolerance before opening an account or investing in a new asset. Simpler is typically better when it comes to managing finances. The more you understand, the better you can steer your financial future.