New banking crisis? Follow the money trail!
You’re not alone if you’ve wondered what’s happening to our global banking system. Investors, consumers, business owners, commercial entities, and the tech sector, in general, are taking notice of three epic bank failures over the past week, a historical event that has profound implications for the future of banking as we know it.
What just happened? President Biden said we all have a right to know. When President Biden was addressing the nation, Biden said, “During the Obama/Biden administration, we put in place tough requirements on banks, like Silicon Valley Bank and Signature Bank, including the Dodd-Frank law, to make sure that the crisis we saw in 2008 would not happen again.”
Epic Fail
Silvergate and Signature Banks were both involved with cryptocurrency companies and found themselves in a lot of trouble when customers started to take their money out of the bank. Word was out when Silvergate went under, as many of the same companies also banked with Signature Bank. Cryptocurrency companies are scrambling to find new banking – most banks do not handle cryptocurrency companies’ bank accounts.
Silicon Valley Bank had a lot of bank portfolio companies, venture capital companies, startups, and technology companies with debt and deposits of well over $250K. Still, the Fed took emergency measures to protect the higher sum investments not covered by the FDIC. SVB was also involved with marketplace sellers, including Etsy, which has advised sellers their remittances will be delayed. That will take a lot of work for micro and nano merchants.
What else is going on in the world of banking? Customers at many banks are taking cash out of the bank and moving it to companies offering much higher interest rates on savings accounts, money market accounts, or CDs. As the stock market is not paying off for investors, people are taking cash and moving it into accounts where they can earn interest.
Treasury Secretary Yellen and members of both sides of the house believe it’s time for banks to step up and manage their assets responsibly, letting everyone know there will not be another epic bailout on her watch.
Dodd-Frank, now what?
That’s all well and good, but wasn’t the Dodd-Frank Wall Street Reform and Consumer Protection Act supposed to protect us from stuff like this? How can three banks – California’s Silvergate Bank, New York’s Signature Bank, and global Silicon Valley Bank – fail in one week?
It has been 868 days since the last bank failure, and we’ve gone back into a tailspin in just one week. But for many finance and tech-sector professionals, this time feels worse because it dashed our hopes that we could stabilize our banking system and protect it from events like these. However, the government is stepping up and straightening things out.
Here’s what you need to know:
Your money today: All depositors are protected and will have full access to their money today, Monday, March 13th, 2023.
Government is paying: Taxpayers are not footing the bill. FDIC insurance and a fund that banks pay into oversee this.
Winners and losers: Depositors who will get their money today are the winners. Disgraced bank executives back on the street, investors who have lost millions, and portfolio companies, channel partners, and their downstream merchants, are the losers.
Kevin O’Leary, who lost over $10M in Silicon Valley Bank investments, blames the board and management, who were caught with their pants down and said, “I will never invest in bank stocks again.”
Nationwide Payment Systems can help!
If your technology company or business has been processing with Silvergate, Signature, or Silicon Valley Bank, and you need a merchant account, Nationwide Payment Systems provides consulting services and introductions to direct bank relationships.
If your banking has been interrupted and you are looking for a merchant account, Nationwide Payment Systems and our team of consultants can set you up in minutes, not days.
Visit https://nationwidepaymentsystems.com/solution-finder/ and start your secure, transparent, and protected payment processing journey today.
