Experts, lawmakers weigh in on Silicon Valley Bank collapse
PROVIDENCE, R.I. (WLNE) — The historic collapse of the Silicon Valley Bank Friday has drawn the eyes of the world– including concerned Southern New Englanders.
The office of the General Treasurer reported a roughly $2.5 million hit to the state’s pension fund impacted by the bank’s collapse.
#NEW: @RITreasury reports roughly $2.5 million lost as a result of the SVB collapse.
The money was lost from the state’s pension fund. @ABC6 pic.twitter.com/4NqI9q9fat
— Daniel Coates (@danielcoates_6) March 13, 2023
Economics professor from Holy Cross, Victor Matheson, says this is one of the largest economic collapses in recent history.
“This bank got caught up in a classic bank run like you might have seen on ‘It’s a Wonderful Life,'” said Matheson. “But rather than a bunch of small individual investors and individual savers that lost their money, these are large corporations.”
The bank was unable to pay large-scale depositors as they began to pull their assets out due to financial risks.
Matheson added, “You might see slightly higher banking fees, slightly higher interest rates on your loans, slightly lower interest rates on your deposits. But the average person won’t see this at all and again, there may be a slight amount of increase in insurance premiums spread out across banks throughout the entire country.”
The federal government has since stepped in and ensures assets will be accessed by depositors.
Massachusetts Congressman Jake Auchincloss is now calling for a large-scale briefing by the FDIC to better prepare and safeguard the people of Southern New England.
“Even a healthy, solvent, liquid bank can fall in a matter of hours in mass,” said Auchincloss. “If depositors decide to yank out their funds for this reason, the FDIC needs to act urgently.”
He finished, “There is no need right now to panic, and that panic can be self-fulfilling with these runs in the past. The FDIC, the federal reserve, the treasury are closely monitoring the situation, and as we heard on Sunday evening are ready to take the steps necessary to ensure the solvency and liquidity of the banking system.”