MEMPHIS, Tenn. — The sudden collapse of two U.S. banks catering to the tech industry has sent shockwaves across the country. WREG looked into what the feds are doing to keep your money safe and if Memphis banking customers should be worried.
WREG spoke with Dr. John Gnuschke, a Memphis-area economist.
“Well, it certainly sent shockwaves around the world, really because these banks did business around the world,” Dr. Gnuschke said.
Silicon Valley Bank, which finances many tech companies went down on Friday and on Sunday, Signature Bank in New York followed suit.
“It’s an old problem that happens when you have inflation, you have rising interest rates, and bondholders and bondholders are particularly sensitive at any increase in interest rates,” Dr. Gnuschke said.
Still, the collapse has left many asking questions. For example, will it cause payroll issues for companies, will Memphis banks be impacted and should customers withdraw their money?
“There’s no need to worry about it locally. The issues are being handle nationally. All the depositors are being protected. So, your money is safe in local banks,” Dr. Gnuschke said.
During a short address aimed at calming any fears, President Joe Biden stressed that American taxpayers will not be paying for this emergency bailout.
“Look, the bottom line is this. Americans can rest assured that our banking system is safe. Your deposits are safe,” President Biden said.
The Treasury Secretary, Janet Yellen, also says there will be no government bailout for Silicon Valley Bank similar to what we saw during the pandemic.
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“There were investors and owners of systemic large banks that were bailed out. We are certainly not looking and the reforms that have been put in place mean we are not going to do that again,” Yellen said.
Back in Memphis, economists say your money is safe.
“It’s important that you recognize that the banking system is secure and there’s nothing to worry about. Nothing is going to happen to your money. You’re protected. You’re going to be able to get your money out no matter what happens,” Dr. Gnuschke said.
Most banking experts think the financial crisis will pass, but the political reverberations will continue for some time to come.