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(NEW YORK) — Awkward dads and their eager children may not dance together on TikTok for much longer — at least not in the U.S.

The prospect of a nationwide TikTok ban has escalated from a theoretical possibility to a serious policy consideration, drawing growing support in Washington, D.C.

However, scant details are known about how the policy would be implemented and what it would mean for more than 100 million U.S.-based users of the app.

China-owned TikTok has faced growing scrutiny from government officials over fears that user data could fall into the possession of the Chinese government and the app could ultimately be weaponized by China to spread misinformation.

The Biden administration has stiffened its posture toward TikTok in recent weeks, endorsing a bipartisan bill earlier this month that would empower the federal government to ban apps like TikTok.

The administration’s stance hardened further this week, when officials demanded that TikTok’s Chinese owner sell its stake in the app or risk getting banned, the company and a U.S. official previously told ABC News.

A TikTok ban could take effect in a variety of ways, including its forced removal from Apple and Google app stores or an outright block of access by internet service providers, experts told ABC News.

While dedicated users would find ways to circumvent any government crackdown, the app would suffer a dramatic decline in popularity and eventually be rendered defunct, they added.

“The U.S. doesn’t typically ban websites like this — it would be very much uncharted territory,” Timothy Edgar, a computer science professor at Brown University and a former national security official, told ABC News. “It would be an enormous undertaking.”

TikTok did not respond to ABC News’ request for comment.

In response to bans of TikTok on some government devices, TikTok previously told ABC News in a statement: “We appreciate that some governments have wisely chosen not to implement such bans due to a lack of evidence that there is any such need, but it’s disappointing to see that other government bodies and institutions are banning TikTok on employee devices with no deliberation or evidence.”

“We share a common goal with governments that are concerned about user privacy, but these bans are misguided and do nothing to further privacy or security,” the company added.

Here’s what to know about the different ways the government could implement a nationwide TikTok ban, and what it would mean for TikTok users:

The removal of TikTok from app stores

A simple way to significantly curtail access to TikTok is in the form of a mandatory withdrawal of the app from major app stores, such as those maintained by Google and Apple.

Such a measure would bar new users and limiting existing ones, experts said.

“It would prevent new users from downloading and installing the app,” Qi Liao, a professor of computer science at Central Michigan University, told ABC News. “And the app would not be able to download updates, eventually becoming obsolete.”

The approach has gained support from at least one U.S. Senator. Last month, Sen. Michael Bennet, D-CO, sent a letter to Apple CEO Tim Cook and Google CEO Sundar Pichai, calling on their companies to remove TikTok from their respective app stores and cited concerns about how TikTok handles the data of American users.

Google and Apple did not respond to a previous request for comment about the letter.

Savvy users could get around such a ban by using offline app installation that bypasses the app stores, Liao said.

Still, an app store ban would immediately limit TikTok’s audience, he added.

“As soon as you ban TikTok on the app store, it’s going to make an impact,” Liao said.

A block of access to TikTok’s servers or IP address

A ban of the app could also take effect using a barrier that blocks access to TikTok’s web servers or its IP address, the experts said.

In such a case, attempts to access the app would fail because users would not be able to receive digital content from TikTok or reach its web host.

“It would do enormous damage to TikTok,” Edgar said.

The government could use a “sinkhole,” or a specially designed server that redirects web traffic when users try to reach illicit websites, such as child pornography or pirated material, Edgar said.

“Users may go to a page saying, “TikTok was banned by the U.S. government and this page was seized by the Department of Justice,'” Edgar said.

As with other approaches, users could elude the government-imposed barrier, experts said.

To access the app, users could use a Virtual Private Network, or VPN, which allows one to pose as a user logging on from a location abroad, thereby circumventing the U.S.-specific ban, Liao said.

“In China, it’s the reverse,” Liao said. “People use a VPN to access blocked U.S. services because the Chinese government has such censorship.”

Despite the readily available workaround, the effort required to log in from a VPN will deter many people from continuing their use of TikTok, Edgar said.

“One you’ve banned it, mainstream users may not want to take those kinds of risks — it may not be that important to them,” he said. “TikTok influencers will lose huge amounts of followers.”

A clampdown by internet service providers

A TikTok ban may take shape as a denial of access imposed by internet service providers, companies like Verizon and AT&T that deliver internet access for individuals, homes, businesses and other institutions, experts said.

Internet service providers could “totally block the TikTok network,” leaving all customers unable to access the app, Liao said.

A TikTok ban imposed by India in 2020 required internet service providers to deny customers the ability to use the app, Sarah Kreps, director of Cornell University’s Tech Policy Institute, told ABC News.

“This is a case where in the U.S. you’d have to get Verizon to essentially block this app,” she said.

Liao, who noted that India’s approach also mandated the removal of TikTok from app stores, said a denial of access by internet service providers would expand measures that some companies already take to prevent the use of specific websites, such as age-inappropriate content.

“They’re already doing lots of traffic shaping,” Liao said.

Customers could potentially get around a barrier from internet service providers, or ISPs, by using a different SIM card, the chip implanted in a mobile device that identifies a customer, Liao said. Users could also forego a SIM card altogether, he added.

“Then you’ll completely bypass the ISP-blocking of TikTok,” he said.

As with the other solutions, this approach would not eliminate access entirely but would shrink the user base, Kreps said.

“The hope with that would be to slow down the flywheel,” she said. “You’re not going to prevent every single user from using TikTok but that would certainly make it much more difficult to use.”

Copyright © 2023, ABC Audio. All rights reserved.

(NEW YORK) — A string of bank collapses in recent days sent panic rippling through the financial sector, prompting an extraordinary U.S. government intervention to save depositors and a sharp drop for bank stocks in the U.S. and Europe.

Some people and institutions, however, made money amid the turmoil.

Silicon Valley Bank CEO Greg Becker sold $3.6 million worth of the company’s shares less than two weeks before the bank’s collapse, drawing scrutiny from lawmakers like Rep. Ro Khanna, D-Calif., who called on the bank to claw back the compensation.

Meanwhile, as panic mounted and bank stocks plummeted over a three-day period before the Silicon Valley Bank failure, $2.3 billion in profit flowed to short sellers, traders who bet that the shares would fall, data firm S3 partners said.

Finally, in the aftermath of the bank collapse, a wave of new depositors opened up accounts at some of the nation’s largest banks, such as JPMorgan Chase.

Here’s what you need to know who benefited from the banking crisis and why:

Silicon Valley Bank CEO Greg Becker

Financial filings showed millions worth of shares sold by Becker’s trust late last month, raising questions about what he knew about the imminent financial trouble faced by the bank.

Khanna, who represents the district in which Silicon Valley Bank was headquartered, called for the return of the money to depositors.

“I have said that there should be a clawback of that money,” Khanna said on Monday. “Whatever his motives, and we should find out, that $3.6 million should go to depositors.”

Silicon Valley Bank did not immediately respond to a request for comment.

Kevin Murphy, a professor of finance and business economics at the University of Southern California who specializes in executive compensation, said the stock sale has elicited valid concern.

“There’s no question that this raises eyebrows,” Murphy said. “The optics are bad.”

However, the conduct may be “less problematic” than it appears, he added.

After the exercise price and taxes associated with the sale, Becker stood to gain roughly $1 million, Murphy said, noting that the amount makes up a fraction of the $9.9 million in total compensation received by Becker last year.

Becker’s stock options were set to expire in May, leaving him just a few months shy of the deadline, Murphy added. The stock sale falls within conduct permitted by law.

“It raises red flags,” Murphy said. “But I wouldn’t put as much weight on it as the layman.”

Still, the company could ultimately claw back some or all of the money from Becker, he added, citing financial documents filed by the company earlier this month.

“They do have a policy in place,” he said. “There is scope here for the board to initiate a recoupment but it’s somewhat limited.”

Short sellers

Another set of individuals who profited amid the distress at Silicon Valley Bank is short sellers, investors who make money when a stock drops.

As shares of banks plummeted before and after the collapse of Silicon Valley Bank, short sellers have generated massive profits.

On a single day last week, shares of Silicon Valley Bank plummeted 60%. The stock price of First Republic Bank, another regional lender under stress, fell 30% on Thursday to a low last seen 13 years ago. It later rallied after big banks announced $30 billion in combined deposits in the bank.

Over a nine-day period in early March, short sellers raked in $7.1 billion on $50 billion worth of investments, a staggering return of about 14%, Ihor Dusaniwsky, a managing director at S3 partners, told ABC News.

“That’s a phenomenal return,” Dusaniwsky said. “You’re catching lightning in a bottle.”

The success of short sellers in recent days has stoked concern over the possible role such traders play in depressing the price of Silicon Valley Bank shares, heightening panic on social media and exacerbating the ensuing bank run.

The influence of short sellers deserves scrutiny in the case of Silicon Bank, since its depositors were made up of a relatively small group of venture capital firms, tech startups and other large investors, Connel Fullenkamp, an economics professor at Duke University who studies short selling, told ABC News.

“That’s something we have to take seriously in the case of Silicon Valley Bank because the community of depositors is so internet savvy and tech savvy,” Fullenkamp said. “A big part of the story is how much communication there was among the depositors and certainly this feedback loop of short sellers and depositors can make things worse.”

However, fears about the negative consequences of short selling in a banking crisis overlook the useful role played by such traders, he added.

“Without the short sellers, we get this really strong positive bias that prices keep going up and up — it’s too easy to create stock price bubbles,” he said. “Short sellers are skeptics who put their money where their mouth is.”

Big banks

In the aftermath of the Silicon Valley Bank collapse, as uncertainty spread through the financial system, a flood of depositors opened new accounts at large U.S. banks.

JPMorgan Chase, the largest U.S. bank, received a huge wave of customers and deposits, amounting to hundreds of accounts and billions of dollars, a source familiar with the matter told ABC News.

The bank is telling employees to forego targeting customers amid the financial turmoil but the inflow of customers has arrived regardless, the source said.

JPMorgan Chase declined to respond to a request for comment.

Other top banks, including Bank of America and Citi, have benefited from a similar flood of customers and deposits, the Financial Times reported.

Bank of America declined to comment; and Citi did not respond to a request for comment.

While some big banks gained depositors, the nation’s largest financial institutions took action on Monday in an effort to stabilize the financial sector, placing $30 billion in First Republic bank, one of the embattled regional lenders.

Bank of America, Citi, JPMorgan Chase, Wells Fargo and Goldman Sachs were among a slew of big banks that participated in the effort.

“This action by America’s largest banks reflects their confidence in First Republic and in banks of all sizes, and it demonstrates their overall commitment to helping banks serve their customers and communities,” the banks said in a press statement on Thursday.

“Regional, midsize and small banks are critical to the health and functioning of our financial system,” the statement added.

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(NEW YORK) — SVB Financial Group and top executives have been named in a federal lawsuit amid the collapse of Silicon Valley Bank, the largest bank failure since the 2008 financial crisis.

A shareholder from Wisconsin, who says he lost about $12,000, is named as a plaintiff in a federal lawsuit seeking class action status against SVB who announced a $1.8 billion loss on the sale of securities on March 8.

The lawsuit against SVB Financial Group, CEO Greg Becker and CFO Daniel Beck was filed in the U.S. district court for the Northern district of California on Monday. It is looking for damages to be awarded to people like Chandra Vanipenta who said he invested in SVB between June 16, 2021, and March 10, 2023.

“$12,000 is a lot of money,” Chandra Vanipenta told ABC News.

Vanipenta, 51, is the father of two children and works in the software industry and said he had done his homework and read several financial reports about SVP, prior to investing. He said the company sounded solid and none of the financial reports mentioned warnings from the Federal Reserve about potential interest rate hikes.

“There was no indication of any risk,” Vanipenta said.

Vanipenta said the rapidly falling share price took him totally off guard, and that he lost every penny of $12,000 dollars in SVP shares he bought through his online brokerage account.

He said he bought the shares when the share price was over $200 a share.

“I never thought that it (the share price) would go to zero! And so suddenly,” he said.

The lawsuit states that annual reports for 2020 through 2022, “understated the risks posed to the company by not disclosing that likely interest rate hikes, as outlined by the Fed, had the potential to cause irrevocable damage to the company.”

The lawsuit adds that Becker and Beck “intended to deceive Plaintiff and other members of the Class, or in the alternative, acted with reckless disregard for the truth when they failed to ascertain and disclose the true facts in the statements made by them … to members of the investing public…”

“I feel bad. I should have sold earlier,” Vanipenta said.

Vanipenta said when he learned his once valuable shares were worth nothing, he contacted a law firm to help him. Vanipenta’s lawyer, Laurence Paul Rosen, would not comment on the “pending litigation.”

A partner from a New York based law firm, Levi & Korsinsky, LLP, told ABC News that they plan to file a separate class action lawsuit imminently against SVB.

“We are extremely interested in this, and are looking into it. We will probably be filing our own case this week or next,” Adam M. Apton, a partner in the firm, told ABC News.

ABC News reached out to SVB for comment but have not yet received a response.

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(NEW YORK) — An Ohio public pension fund for teachers revealed it lost millions by holding more than $27 million in Silicon Valley Bank shares before the bank’s collapse.

The State Teachers Retirement System (STRS) of Ohio stated that the shares represented a minuscule portion of its overall holdings –.03% of the total fund — which held over $88.8 billion in assets as of June 2022. The statement confirmed that the bank had no shares of Signature or Silvergate banks, which collapsed in the past weeks.

STRS is a pension fund for over 500,000 current and former public educators in Ohio.

“The collective actions taken by the Treasury Department, Federal Reserve and Federal Deposit Insurance Corporation to insure and backstop deposits have helped to mitigate the situation facing the banking industry,” STRS wrote in their statement. “STRS Ohio continues to monitor and assess the impact of these developments.”

The multi-million dollar loss comes as another repercussion of the ongoing financial crisis. Silicon Valley Bank, the 16th largest bank in the U.S., collapsed one week ago, followed by the collapse of Signature Bank. Silvergate Bank, which specialized in providing services to cryptocurrency users, also liquidated its assets earlier in March.

The financial crisis has impacted other pension funds, including North Carolina’s state pension fund and California’s public employee retirement fund.

In a statement to ABC News’ Raleigh station WTVD, North Carolina Treasurer Dale Folwell said the state’s pension fund held about $9.9 million in Silicon Valley Bank and $7.8 million in Signature Bank stock. Similar to STRS, the limited exposure to North Carolina amounted to only .01% of the total value of the impacted portfolios.

The California Public Employees’ Retirement System, which covers 1.5 million people, also revealed it had roughly $67 million in exposure to Silicon Valley Bank and $11 million in exposure to Signature Bank at a board meeting this week. The nation’s largest public pension fund with over $422 billion, CalPERS suffered a relatively small impact from the financial crisis.

The losses in California, Ohio and North Carolina represent a fraction of the losses suffered by a Swedish pension fund representing over 2.6 million people that invested over $1.1 billion in Signature and Silicon Valley Bank. Magnus Billing, the CEO of Alecta, told Bloomberg that the investments were a “big failure” and that the fund would likely write off their holdings as a loss.

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(NEW YORK) — The CEO behind the company that created ChatGPT believes artificial intelligence technology will reshape society as we know it. He believes it comes with real dangers, but can also be “the greatest technology humanity has yet developed” to drastically improve our lives.

“We’ve got to be careful here,” said Sam Altman, CEO of OpenAI. “I think people should be happy that we are a little bit scared of this.”

Altman sat down for an exclusive interview with ABC News’ chief business, technology and economics correspondent Rebecca Jarvis to talk about the rollout of GPT-4 — the latest iteration of the AI language model.

In his interview, Altman was emphatic that OpenAI needs both regulators and society to be as involved as possible with the rollout of ChatGPT — insisting that feedback will help deter the potential negative consequences the technology could have on humanity. He added that he is in “regular contact” with government officials.

ChatGPT is an AI language model, the GPT stands for Generative Pre-trained Transformer.

Released only a few months ago, it is already considered the fastest-growing consumer application in history. The app hit 100 million monthly active users in just a few months. In comparison, TikTok took nine months to reach that many users and Instagram took nearly three years, according to a UBS study.

Watch the exclusive interview with Sam Altman on “World News Tonight with David Muir” at 6:30 p.m. ET on ABC.

Though “not perfect,” per Altman, GPT-4 scored in the 90th percentile on the Uniform Bar Exam. It also scored a near-perfect score on the SAT Math test, and it can now proficiently write computer code in most programming languages.

GPT-4 is just one step toward OpenAI’s goal to eventually build Artificial General Intelligence, which is when AI crosses a powerful threshold which could be described as AI systems that are generally smarter than humans.

Though he celebrates the success of his product, Altman acknowledged the possible dangerous implementations of AI that keep him up at night.

“I’m particularly worried that these models could be used for large-scale disinformation,” Altman said. “Now that they’re getting better at writing computer code, [they] could be used for offensive cyberattacks.”

A common sci-fi fear that Altman doesn’t share: AI models that don’t need humans, that make their own decisions and plot world domination.

“It waits for someone to give it an input,” Altman said. “This is a tool that is very much in human control.”

However, he said he does fear which humans could be in control. “There will be other people who don’t put some of the safety limits that we put on,” he added. “Society, I think, has a limited amount of time to figure out how to react to that, how to regulate that, how to handle it.”

President Vladimir Putin is quoted telling Russian students on their first day of school in 2017 that whoever leads the AI race would likely “rule the world.”

“So that’s a chilling statement for sure,” Altman said. “What I hope, instead, is that we successively develop more and more powerful systems that we can all use in different ways that integrate it into our daily lives, into the economy, and become an amplifier of human will.”

Concerns about misinformation

According to OpenAI, GPT-4 has massive improvements from the previous iteration, including the ability to understand images as input. Demos show GTP-4 describing what’s in someone’s fridge, solving puzzles, and even articulating the meaning behind an internet meme.

This feature is currently only accessible to a small set of users, including a group of visually impaired users who are part of its beta testing.

But a consistent issue with AI language models like ChatGPT, according to Altman, is misinformation: The program can give users factually inaccurate information.

“The thing that I try to caution people the most is what we call the ‘hallucinations problem,'” Altman said. “The model will confidently state things as if they were facts that are entirely made up.”

The model has this issue, in part, because it uses deductive reasoning rather than memorization, according to OpenAI.

“One of the biggest differences that we saw from GPT-3.5 to GPT-4 was this emergent ability to reason better,” Mira Murati, OpenAI’s Chief Technology Officer, told ABC News.

“The goal is to predict the next word – and with that, we’re seeing that there is this understanding of language,” Murati said. “We want these models to see and understand the world more like we do.”

“The right way to think of the models that we create is a reasoning engine, not a fact database,” Altman said. “They can also act as a fact database, but that’s not really what’s special about them – what we want them to do is something closer to the ability to reason, not to memorize.”

Altman and his team hope “the model will become this reasoning engine over time,” he said, eventually being able to use the internet and its own deductive reasoning to separate fact from fiction. GPT-4 is 40% more likely to produce accurate information than its previous version, according to OpenAI. Still, Altman said relying on the system as a primary source of accurate information “is something you should not use it for,” and encourages users to double-check the program’s results.

Precautions against bad actors

The type of information ChatGPT and other AI language models contain has also been a point of concern. For instance, whether or not ChatGPT could tell a user how to make a bomb. The answer is no, per Altman, because of the safety measures coded into ChatGPT.

“A thing that I do worry about is … we’re not going to be the only creator of this technology,” Altman said. “There will be other people who don’t put some of the safety limits that we put on it.”

There are a few solutions and safeguards to all of these potential hazards with AI, per Altman. One of them: Let society toy with ChatGPT while the stakes are low, and learn from how people use it.

Right now, ChatGPT is available to the public primarily because “we’re gathering a lot of feedback,” according to Murati.

As the public continues to test OpenAI’s applications, Murati says it becomes easier to identify where safeguards are needed.

“What are people using them for, but also what are the issues with it, what are the downfalls, and being able to step in [and] make improvements to the technology,” says Murati. Altman says it’s important that the public gets to interact with each version of ChatGPT.

“If we just developed this in secret — in our little lab here — and made GPT-7 and then dropped it on the world all at once … That, I think, is a situation with a lot more downside,” Altman said. “People need time to update, to react, to get used to this technology [and] to understand where the downsides are and what the mitigations can be.”

Regarding illegal or morally objectionable content, Altman said they have a team of policymakers at OpenAI who decide what information goes into ChatGPT, and what ChatGPT is allowed to share with users.

“[We’re] talking to various policy and safety experts, getting audits of the system to try to address these issues and put something out that we think is safe and good,” Altman added. “And again, we won’t get it perfect the first time, but it’s so important to learn the lessons and find the edges while the stakes are relatively low.”

Will AI replace jobs?

Among the concerns of the destructive capabilities of this technology is the replacement of jobs. Altman says this will likely replace some jobs in the near future, and worries how quickly that could happen.

“I think over a couple of generations, humanity has proven that it can adapt wonderfully to major technological shifts,” said Altman. “But if this happens, you know, in a single digit number of years, some of these shifts, that is the part I worry about the most.

But he encourages people to look at ChatGPT as more of a tool, not as a replacement. He added that “human creativity is limitless, and we find new jobs. We find new things to do.”

“I think over a couple of generations, humanity has proven that it can adapt wonderfully to major technological shifts,” Altman said. “But if this happens in a single-digit number of years, some of these shifts … That is the part I worry about the most.”

The ways ChatGPT can be used as tools for humanity outweigh the risks, according to Altman.

“We can all have an incredible educator in our pocket that’s customized for us, that helps us learn,” Altman said. “We can have medical advice for everybody that is beyond what we can get today.”

ChatGPT as ‘co-pilot’

In education, ChatGPT has become controversial, as some students have used it to cheat on assignments. Educators are torn on whether this could be used as an extension of themselves, or if it deters students’ motivation to learn for themselves.

“Education is going to have to change, but it’s happened many other times with technology,” said Altman, adding that students will be able to have a sort of teacher that goes beyond the classroom. “One of the ones that I’m most excited about is the ability to provide individual learning — great individual learning for each student.”

In any field, Altman and his team want users to think of ChatGPT as a “co-pilot,” someone who could help you write extensive computer code or problem solve.

“We can have that for every profession, and we can have a much higher quality of life, like standard of living,” Altman said. “But we can also have new things we can’t even imagine today — so that’s the promise.”

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(NEW YORK) — Ford announced this week that it is recalling more than 1.2 million of its vehicles over a serious issue with its brake fluid hoses.

The National Highway Traffic Safety Administration said Ford Fusions and Lincoln MKXs sold between 2013 and 2018 have an issue where the front brake hoses may rupture and leak brake fluid.

“A brake fluid leak will increase brake pedal travel and extend the distance needed to stop the vehicle, increasing the risk of [a] crash,” the NHTSA said.

Owners will be notified about the recall in letters, the agency said. Dealers will replace the front brake hoses, free of charge, according to the NHTSA.

Owners can contact Ford at 1-866-436-7332, and ask about recall 23S12, or contact the NHTSA at 1-888-327-4236.

Copyright © 2023, ABC Audio. All rights reserved.

(WASHINGTON) — A ban on TikTok in the United States or a sale of the app by its Chinese owner, ByteDance, will not resolve national security concerns or fears TikTok could be used to siphon Americans’ data, according to a new cybersecurity report obtained by ABC News.

The report, from the cybersecurity company Feroot, said the app still has your data even if you’ve never used TikTok. And it’s collecting and transferring that data whether or not the app is deleted, according to the report.

“TikTok can be present on a website in pretty much any sector in the form of TikTok pixels/trackers,” the report said. “In many cases, the pixels/trackers immediately start executing and have little to nothing to do with the immediate business of the website owner.”

Webpages associated with everything from airlines and e-commerce sites to technology companies and state and federal governments are riddled with TikTok’s trackers called pixels, which are part of the code that loads into your browser from various websites, according to Feroot. They immediately link to data harvesting platforms that pick off usernames and passwords, credit card and banking information and details about users’ personal health.

Sites that require logins and authentications may think they’re adding a layer of security, but TikTok’s pixels just collect those names, passwords and authentication codes along with other data, according to Feroot.

The pixels transfer the data to locations around the globe, including China and Russia, often before users have a chance to accept cookies or otherwise grant consent, the Feroot report said.

TikTok is not the only company that uses its pixels throughout the internet. The report found Google, Meta and Microsoft, among others, use these trackers.

The company told ABC News on Thursday that since June, all new U.S. user data has been routed to the Oracle cloud, and since October, access to that secure environment has been limited to employees of TikTok U.S. Data Security; Today, those employees manage all access to U.S. user data.

A TikTok spokesperson told ABC News this week amid the Biden administration’s call for ByteDance to divest from the app, “The best way to address concerns about national security is with the transparent, U.S.-based protection of U.S. user data and systems, with robust third-party monitoring, vetting and verification, which we are already implementing.”

TikTok said it will continue to move forward with a plan called “Project Texas” to safeguard U.S. user data as it evaluates the administration’s position.

ABC News’ Elizabeth Schulze contributed to this report.

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(NEW YORK) — The word “bailout” is sure to make anyone who remembers the 2008 financial crisis nostalgic in all the worst ways. At the time, the government used taxpayer money to keep some of the country’s largest financial institutions afloat.

Two regional banks recently collapsed. As depositors of those banks feared for the money in their accounts, the Fed stepped in to replenish any of the money depositors would have lost.

The U.S. government and even the banks struggle to call it a bailout in any way that relates to what happened in 2008, with the government refusing to call it a bailout at all, and there’s a couple of reasons for all of this.

What happened?

When Silicon Valley Bank (SVB) and Signature Bank were seized and shut down by regulators last weekend, depositors of those banks feared for their money. The FDIC insures depositors’ money up to at least $250,000 – meaning if you had more than that amount in one of those banks, you may be out of luck.

However, the Treasury Department, the Federal Reserve, and the FDIC announced they would make sure all depositors with accounts at SVB and Signature Bank would have access to their funds by the next day — beyond just the $250,000 guaranteed by the FDIC.

The Fed announced a few other actions as well — like making funds available for other financial institutions in the form of one-year loans. This is all to instill confidence in other banks after SVB’s collapse, and to avoid any run on the banks.

The money is going to customers, not the institutions.

“In 2008, we were actually bailing out companies,” said Art Hogan, a chief market strategist with B. Riley Wealth and Art’s with over 30 years experience working in the U.S. equity markets. “Banks that were seen as too big to fail.”

But now, as Hogan puts it, the government is not coming to save SVB or Signature Bank — noting that all the money is going towards depositors, not the banks.

“But [the government] is not going to let the depositors get hurt,” says Hogan. “They’re actually rescuing depositors in banks that made some bad decisions over the course of the last year or so.”

That means investors, employees or others who were making money from these institutions are out of luck and should not be able to touch any of the money the government will be using to make depositors whole.

“What happened during the financial crisis: shareholders and bondholders of many of our biggest banks were bailed out by the government,” said Gerard Cassidy managing director with RBC Capital Markets. Cassidy has been with and provided RBC with investment research on the U.S. banking industry for more than 30 years.

“The shareholders and bondholders of the two respected banks that failed — Silicon Valley and Signature, were completely wiped out; And so, from that standpoint, I would say this is not a bailout,” he said.

SVB is not in complete shambles. HSBC on Monday announced a deal to buy the U.K. subsidiary of Silicon Valley Bank, which has a new name: SVB Bridge Bank.

But back to the word “bailout” — which has no traditional definition. Some still consider the actions taken by the government over the last week a bailout. The difference, per some experts, between now and 2008 is simply who is being bailed out: the depositors.

“Bailout,” yelled senior economics fellow at Brookings Institution, Aaron Klein, during a phone interview with ABC News. “That’s what it is — plain and simple.”

Klein spent over a decade working in government, including his time as chief economist of the Senate Banking. During that time, he worked on the Troubled Asset Relief Program (TARP) — a $700 billion government bailout authorized by Congress in October of 2008.

Klein’s point is that the depositors being made whole beyond the original $250,000 guarantee are, in essence, getting bailed out. Everyone who had less than that in their accounts was already guaranteed their money back by the Fed, he noted.

“If you lined up 20 Americans in a room, the 19th richest person will have – based on the average – about $69,000 in their bank account,” noted Klein. “Very few Americans have more than $250,000 in a single bank.”

Per the bank’s own description, SVB catered its services to venture capitalists (VCs), start-up and leaders in the tech industry — many of whom could be considered financially “well-off”.

“VCs should say thank you,” wrote New York Times’ and CNBC’s Andrew Ross Sorkin on Twitter.

“It is a bailout,” he wrote. “Not like 2008. But it is a bailout of the venture capital community + their portfolio companies (their investments). That’s the depositor base of SVB.”

If the government is stepping in to guarantee these bank customers their money beyond the $250,000 guarantee, many are left wondering where that money is coming from and how this is not considered a bailout.

No taxpayer money will be used, says the Fed.

The White House, the Treasury and the FDIC have been blunt about one talking point: the money for these depositors at SVB and Signature Bank will not come from taxpayers.

“For the banks that were put into receivership, the FDIC will use funds from the Deposit Insurance Fund to ensure that all of its depositors are made whole,” said a senior Treasury Department official Sunday.

The Deposit Insurance Fund (DIF) is a program run by the FDIC mainly funded through quarterly assessments on insured banks, paid by the banks — as well as interest on funds invested in government bonds. This is how that $250,000 gets guaranteed, but now the government is going beyond that guarantee to ensure confidence.

The DIF currently has over $100 billion in it, which should be a “sufficient” amount to make SVB and Signature Bank whole, officials said Monday.

The funds offered in the form of one-year-loans to other banks, savings associations, credit unions, and other eligible depository institutions — all of whom will have to put up qualifying assets as collateral — will come from a new Bank Term Funding Program (BTFP).

This is more of a failsafe. The BTFP is aimed at safeguarding banks who may have lost depositors’ confidence after the SVB and Signature Bank collapse.

“This action will bolster the capacity of the banking system to safeguard deposits and ensure the ongoing provision of money and credit to the economy,” the Fed said in a statement. “The Federal Reserve is prepared to address any liquidity pressures that may arise.”

If needed, the BTFP will be partially funded by up to $25 billion from the Exchange Stabilization Fund (ESF). The ESF is an emergency reserve fund normally used for foreign exchange intervention.

The Fed says it “does not anticipate that it will be necessary to draw on these backstop funds.”

It’s unclear how much harm the collapse of SVB and Signature Bank did to depositors’ confidence — earlier this week, stocks of more than two dozen regional banks tumbled.

Banks varying in size from around the country, including San Francisco-based First Republic Bank and Salt Lake City-based Zions Bank, find themselves in market turmoil as some customers rushed to withdraw their deposits and investors dumped bank stocks fearing a run on those banks.

The turmoil in regional U.S. banks spread to Europe Wednesday. The stock of Credit Suisse, a long troubled Swiss bank, plunged 24% on Wednesday. While American banks stocks had another down day. Analysts say the rapid interest raise increases by the federal reserve are shaking confidence in the entire sector.

Nevertheless, the Fed says it’s prepared to make depositors whole should any other bank suffer the same fate as SVB and Signature Bank.

It’s worth noting that most experts agree that the collapse of these two banks was caused by poor management and misguided financial decisions, and should be considered exceptional circumstances.

“This was a poorly managed bank that ran into a couple of different issues at the very same time,” said Cassidy regarding SVB. “It looks like everyone’s money will be insured even beyond $250,000 – so the idea is not to panic, this will settle down…we’ll get through this.”

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(NEW YORK) — The failure of Silicon Valley Bank, the second-biggest bank collapse in U.S. history, called into doubt the fate of roughly $175 billion in customer deposits.

Days later, the U.S. government guaranteed the protection of all Silicon Valley Bank deposits but the turmoil left Americans with a lingering question: Is my money safe in the bank?

Robust insurance protections for bank deposits and the infrequency of bank failures afford security for account holders, making deposits safe even as the industry undergoes turmoil, experts told ABC News.

“It’s absolutely 100% safe,” Mark Zandi, the chief economist at Moody’s Analytics, told ABC News. “All depositors in banks and credit unions can be entirely confident that their money is safe.”

The Federal Deposit Insurance Corporation, or FDIC, which safeguards the stability of the financial system, protects depositors at all FDIC-insured banks for up to $250,000 in funds for each different type of account held.

Nearly every bank is FDIC insured, and the vast majority of accounts fall below the $250,000 threshold.

In other words, bank account holders with $250,000 or less can rest assured that their money enjoys full protection from the U.S. government in the event of a bank failure.

A joint account between two individuals qualifies for FDIC insurance of up to $500,000.

Similarly, credit unions are insured by the National Credit Union Administration, a government agency.

In an effort to tamp down financial panic and prevent a wider crisis, the U.S. government dramatically expanded FDIC insurance protections to cover accounts at failed banks Silicon Valley Bank and Signature Bank that exceed the $250,000 threshold.

If other financial institutions collapse as a result of the fallout, the government will likely extend that full protection to depositors at the affected banks, Zandi said.

“There is no way at this point, given all the angst, that the government is going to allow a depositor to lose a penny,” he said.

In normal market conditions, however, depositors with funds that exceed $250,000 stand to lose part or all of the money if a bank goes belly up. Individuals or institutions with holdings that exceed that threshold can divide their money between multiple different account types or banks to keep each one below the threshold, Zandi said.

When an FDIC-insured bank collapses, a government agency typically takes control of the bank and soon afterward makes funds available to customers.

“In many cases, regulators go in and seize the banking operations and determine what deposits are owed and do their best to get those paid out within the next day or two,” Jeff Jones a finance professor at Missouri State University, told ABC News.

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Depositors can find solace not only in the robust insurance protections but also in the knowledge that U.S. bank failures are very rare, experts said.

Not a single bank failure took place last year or the year before, according to research firm Bankrate. In 2010, at the height of the Great Recession, 157 banks failed.

For context, there are 4,706 commercial banks and savings institutions insured by the FDIC, the agency said last month.

“You can calculate the probability,” Zandi said. “It’s pretty small.”

Despite the collapse of two of the nation’s 30-largest banks in recent days, the possibility of widespread bank failures remains highly unlikely, the experts said, noting extraordinary government intervention that helped contain the damage to the financial system.

“I feel confident that the financial system is on very solid footing,” Zandi said. “The government intervention here was extremely aggressive.”

Besides raising awareness about how to protect one’s funds in the bank, the downfall of Silicon Valley Bank also offers lessons for how to invest money elsewhere, the experts said.

Silicon Valley Bank had loaded up on investments into long-term Treasury bonds and mortgage bonds, which typically deliver small but reliable returns amid low interest rates.

As the Federal Reserve aggressively hiked interest rates over the past year, however, those holdings lost significant value.

The takeaway for individuals is the importance of diversification, the experts said, defining that principle as the placement of funds into a range of investments.

“As long as you’re well-diversified, any kind of issue you have will likely be very small and contained,” Jones said.

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