Local impact of big bank failures
(WFSB) - Two big banking failures have people concerned about their own money.
Silicon Valley Bank collapsed last week. Signature Bank then collapsed over the weekend.
While most people in Connecticut did not personally use either bank, most people probably use a tech startup that banked there. Silicon Valley Bank was known for funding tech startups like Pinterest, Etsy and Roku.
Employees and small businesses are now wondering if their checks will clear.
Broad Street Pizza has been serving Meriden since 1991. As the times have changed, so has the way you order. Now around 25% of their business comes through the Slice App.
“It’s not a cash business like it was before,” said owner Nolberto Gonzalez.
Gonzalez gets a check from Slice about once a month. He currently has a check he can’t cash because it’s from Silicon Valley Bank.
“Friday when I was listening to the news, I heard that the bank that they deal with went under. I said ‘oh no.’” said Gonzalez.
The collapse of Signature Valley Bank, or SVB is the second largest bank failure in U.S. history.
President and CEO of the Credit Union League of Connecticut Bruce Adams says there is a big difference between credit unions and SVB.
“”Here in Connecticut, our financial institutions are so highly regulated, and they are very safe and very sound,” said Adams. “Really people shouldn’t be worried. I mean that’s really an apple and an orange here in terms of the situation.”
University of Connecticut Assistant Professor of management and entrepreneurship Ryan Coles agrees people in Connecticut shouldn’t panic.
“I don’t think this is another kind of 2008 financial system crisis. I think by and large the banking industry is strong,” said Coles. “Right now it’s about ensuring public trust in the system given what happened with SVB late last week.”
Coles says what this will impact is how startups finance themselves moving forward. Coles says startups may turn more to local banks.
For now, President Biden is promising businesses that they will get their money.
“All customers who had deposits in these banks can rest assured. Rest assured, they’ll be protected and they’ll have access to their money as of today,” said Biden.
Gonzalez is expecting to get his money soon.
“They issued me another check, hopefully that solves the problem,” said Gonzalez.
A Slice spokesperson says all shop owners will be paid in full and on-time. Slice can cut a new check from the other banks it works with. Slice had proactively warned shop-owners because of uncertainty around SVB funds, but shops should all get their money.
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