I saw two news
$910 billion in deposit flight from banks in one year
and
one week 98 billion out from bank
My main question is how long term investor protects from any harm that may be building up, other questions are
Is this money leaving OUT of USA?
It is possible that some of the money is doing that. Some foreigners are moving money out of the US, but I would think that the big money was invested in Treasuries.
Is the money going to different asset class?
Yes, especially if you expand the definition of asset class. Some could be going into the stock market, but other funds would be moving from bank account to treasuries. I know I have done this. I made this move in 2022 long before the regional bank problem in the Spring of 2023.
There is another sector that isn't captured in the report you quoted. Credit Unions. Because they are a smaller sector I don't think that a big percentage is moving into credit unions, but with the recent problems with the regional banks some people may be making a shift.
Is the money going to mattresses or just Evaporate ?
for the average person, they are well under the insurance coverage limits. The problem this year has been a poor choice of investments by some banks, and too much money from companies in excess of the insurance coverage.
If you are under the limits there is little reason to put your money under a mattress. If you are just over the limit, you can open an account with another financial institution.
what is more likely is that people are spending more than they did in 2020 and 2021. This is due to better job situation, more places to spend money, and inflation. Those will cause a decrease in bank balances.
My main question is how long term investor protects from any harm that may be building up
You will have to dig into the financials of the banks you have invested in. Some may have been able to pivot as interest rates changed, others have not.
If you believe that it no longer makes sense to invest in these companies, then you have to decide if it is time to sell.
