Staff Writer
Michael Volpicelli
As of recent news, two large banks in America have collapsed: the Silicon Valley Bank, which is the 16th largest bank in The United States and the Signature Bank, which has a total asset value of over 100 billion dollars.
With two of the largest banks in the United States collapsing, this begs the questions of how, why and who will fix the issue?
For Silicon Valley Bank, two of the main factors for the bank failing come from failed investments and depositors withdrawing large sums of money from the bank after being made aware of the bank’s failed investments and inability to help its depositors.
As for Signature Bank, it is believed that it collapsed due to a domino effect from Silicon Valley Bank with depositors withdrawing billions of dollars upon hearing the news of Silicon Valley. Signature Bank’s stock also took a plummet on the last day of public trading.
With these two banks failing it is confirmed to be the biggest bank failures since the Great Recession in 2008 where the global economy lost over 2 trillion dollars. There are no confirmed numbers of the damage these bank failures will cause the global economy yet.
In this moment and time with billions or even trillion of dollars being lost the American people are uneasy and are wondering who is going to pay back the money the banks lost?
The Biden Administration and the Federal Reserve have already started to act in hopes of relieving stress and lowering the panic levels so that people do not harm healthy banks in this time of confusion.
The Biden administration has stated that they will approve uninsured deposits at both banks and the Federal Reserve is working on implementing a new lending system to the banks that need to borrow money for depositors’ withdrawals.
With this news it is almost certain that other healthy banks across The United States will have to help the failing banks get back on their feet by lending them money to pay the people back. While we do not know if this will affect taxpayers there is a possibility that it will.
The Federal Reserve will be the people whom most the answers and solutions will come from since they monitor The United States financial system and distribute money.
There is a risk of higher inflation rates to try and bring these two banks back to life but only time will tell at this point in the process but the Biden Administration and the Federal Reserve both want to avoid more inflation within the American economy.
With this being breaking news and people in a panic there is no way to tell how hard this will impact people not only in the United States but also globally.
As for now, there are various questions and a wave of uneasiness for millions of Americans, but we can only wait for more information and hope the people we put in power to run the country come up with the best solution possible.