Getting Answers: local impact of Silicon Valley Bank’s collapse

SPRINGFIELD, MA (WGGB/WSHM) - We’re getting answers on the local impact of the Silicon Valley Bank collapse after President Joe Biden assured Americans Monday that the United States banking system is safe.

“Silicon Valley is the heart of the technology sector and this bank was pretty important to a lot of these startups and venture capital,” said AIC Economics Professor John Rogers.

The Silicon Valley Bank collapse is the second largest bank failure in U.S. history and has left many unanswered questions for people across the country.

“The financial system is, on the one hand, it’s strong. It’s solid after the 2008 crisis. The banks were forced to keep higher capital ratios to withstand these kinds of shocks.” Rogers added.

So, what does the collapse of this bank mean for you?

“I don’t think that the impact locally is necessarily significant…If you have less than $250,000 in the bank, you really don’t have much to worry about. If you have a business or if you have a large chunk of money, you may want to think about diversifying it and spreading it around, so you don’t have all your eggs in one basket,” Rogers explained.

The federal government has now taken action to stop a potential banking crisis. President Biden addressed the fallout on Monday and assured Americans that the United States banking system is safe.

“I’m going to ask Congress and the banking regulators to strengthen the rules for banks to make it less likely this kind of bank failure would happen again and to protect American jobs and small businesses,” Biden said.

Rogers told us it is critical for Silicon Valley Bank to survive in order to help boost the economy, but he is also sharing any potential domino effects from this bank failure.

“There will be certain ripple effects. For example, this morning, the stock market is actually up a little bit, but the banking stocks are way down, so this has affected the entire banking sector because it’s a lot of instability and I think that’s going to be bad for people in the short run who have 401(K)s which have a certain number of bank stocks in their investment portfolio,” Rogers noted.

Massachusetts Governor Maura Healey also released a statement that read, in part:

“Our administration is actively working to support individuals and businesses affected by SVB’s closure and to find solutions to help them address immediate needs, including putting supports in place to ensure that small businesses and employees do not experience significant disruptions.”

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