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As several large banks close or get taken over, is your money safe?

Three banks close in nearly as many days, creating concern
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Posted at 5:26 PM, Mar 13, 2023
and last updated 2023-03-13 18:21:34-04

CLEVELAND — With the closure and government takeover of several major banks in the last few days, local small business owners are expressing concern, but financial experts say the government got involved in time to prevent a more dramatic collapse of the markets.

Nichelle McCall Browne is a small business owner. She and her husband own the children’s monthly subscription box service The Landmark Kids. She is also the founder of Bold Startup, a company that helps entrepreneurs get funding. She’s closely watching what’s happening with the banks, including Silicon Valley Bank.

“They’re a major player in the start-up entrepreneurial space when it comes to funding, “ added Browne.

If you think the failure of these banks doesn’t affect you, Browne said don’t be so sure.

“There is a big ripple effect,” she said.

For instance, in the case of Browne's small business, she might not use the bank but, “if we were leveraging some of these other small businesses to fill some of our boxes with some of their toys and their products to teach kids, now we’re not able to be able to work with those small businesses because they can’t sell their products on that platform because the bigger marketplace platform is in a situation where they’re not able to access their funding,” she explained.

First, Silvergate Bank announced it would shut down operations on March 8. Silicon Valley Bank was taken over by the government on March 10. Then two days later, regulators closed Signature Bank.

“Those who had money in their bank accounts at those banks that either liquidated or got taken over by the FDIC were moving their cash out of the bank," said Greg Harmon, Assistant Professor of Banking and Finance at Case Western Reserve University’s Weatherhead School of Management. "So, what we would have talked in the 1930s as a run on the bank — so in the digital age, that can happen very quickly now."

He said the government got involved in a timely manner.

“They stepped in and they calmed markets by putting this facility in place so that you and I can be comfortable that we don’t have to go down the road to our bank and take all of our money out. They’ve guaranteed that the money will be there and will be available," Harmon said.

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