Banks make risky bets and lose
The ripple effects from the collapse of Silicon Valley Bank are just starting to be felt. While the trouble has not spread to larger banks, the situation could change quickly. The Biden administration has guaranteed that customers of SVB and Signature Bank — another bank teetering on the brink of collapse — will have access to their money. Unless you have savings in either of these banks or use them for banking purposes, there will be little impact on your financial well-being.
Alexander Joyce, president and CEO of ReJoyce Financial, said the situation is not surprising since it is getting harder to access money.
“The Federal Funds Rate — the interest rate banks pay to borrow money from each other — has been rising,” said Alexander. “And the Federal Reserve Board has implemented inflation fighting strategies, which has made less government money available for borrowing. When you add it all together, those who made risky bets lose. It’s simple math.”
The Federal Deposit Insurance Corporation protects the money depositors place in insured banks in the unlikely event of an insured-bank failure. Each depositor is insured to at least $250,000 per insured bank. However, stockholders in SVB and Signature Bank will not be bailed out. They will lose their investments.
“The best course of action before making investments is to consult with a financial advisor. We know the data to monitor and the signs to watch for,” said Alexander. “We will also equip you with the best strategies and approaches that protect your financial well-being and retirement.” Call (317) 903-9157 or text 707 ReJoyce to schedule a visit to discuss investing.