CHARLOTTE — Silicon Valley Bank was closed by federal regulators on Friday after it experienced a traditional bank run, which is when depositors rush to withdraw their funds all at once.
It is the second-largest bank failure in U.S. history, behind only the 2008 failure of Washington Mutual.
Then on Sunday, Signature Bank was seized by regulators. Its customers include some of the country’s largest law firms. The bank, which accepted deposits of cryptocurrency assets, began to see a run on deposits following the failure of Silicon Valley Bank.
President Joe Biden tried Monday to ease concerns about the nation’s banking system.
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Regulators said they seized Signature Bank because it could threaten the stability of the entire financial system if it failed.
“Americans can have confidence that our banking system is safe,” Biden said. “Your deposits will be there when you need them.”
Biden explained how the White House is taking action. It’s backstopping deposits, making sure taxpayers are not on the hook for these moves, holding those responsible accountable, and declining to extend relief to investors of Silicon Valley Bank.
How does this impact Charlotte?
Charlotte has a growing financial tech sector that, so far, doesn’t seem to be significantly impacted. But for many, it’s bringing back bad memories of 2008 and also fueling concerns that the long-awaited recession may be here.
Before its collapse on Friday, Silicon Valley Bank was scheduled to open a location in Charlotte in The Line building in South End. Fintech entrepreneur and Charlotte City Councilman Tariq Bokhari said that’s likely not happening anymore, but they never got any incentives from the city.
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He also pointed out that, unlike the 2008 financial crisis, Silicon Valley Bank and its customers got hurt by high interest rates.
“The same interest rates impact their customer base of startups more than anybody else’s customer base,” he said. “So it’s this perfect storm.”
Bokhari hasn’t seen or heard of any local fintech companies with high exposure to the two collapsed banks yet.
“I would say though, we’re going to see this onion unwrap a little more in the weeks to come, we’ll see third-party risk exposure, fourth-party risk exposure,” he said.
Signature Bank has two offices in one building in Uptown, but there’s no retail branch in Charlotte. One of the offices has a single business unit of the bank and the other is an unfinished office.
North Carolina Treasurer Dale Folwell said Monday he has been reviewing the situation along with the state banking commissioner. They say the banks they regulate are more diversified and don’t have as many unsecured deposits, and said “at this time, the abbreviation ‘NC’ stands for ‘no crisis.’”
The Associated Press and the Cox Media Group National Content Desk contributed to this report.
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