Economist talks bank collapse impact in Northeast Arkansas
JONESBORO, Ark. (KAIT) - A bank that held billions of dollars for major tech companies collapsed recently, but some of the impacts are expected to be felt in small businesses.
The Silicon Valley Bank was closed by the California Department of Financial Protection and Innovation on Friday, March 10.
Following the announcement, many people started pulling their money out of the bank.
“A lot of businesses, small businesses were going to lose a lot of their money because they only go 250 thousand dollars back,” said Gary Latanich, a former economics professor.
Latanich said this could have been a disaster for many if the federal government did not step in and loaned Silicon Valley Bank
“So, the Federal Reserve said this is what we are going to do. We are going to allow you to borrow money from us,” Latanich said.
The Federal Reserve is going to loan the bank money to give back to the depositors, so they will have all their money.
Latanich said people in Northeast Arkansas do not have much to worry about.
“This is not like 2008 when every bank had some mortgages, subprime mortgages, this is something unique to a California bank,” he said.
Latanich said the banks in the region are working with different types of customers and are keeping up with bonds and interest rates.
“Most of the banks here are well diversified and they all are following the rules closely,” he said.
Right now, the parent company of SVB is hoping to secure what is left of the company after the bank filed for bankruptcy.
Copyright 2023 KAIT. All rights reserved.