Reply to SVB Bank Run: Fed Calling Emergency Meeting

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]How does one mismanaged bank cause confidence in the entire banking system to collapse?[/quote]

Because it's the psychology of being a small business owner seeing the headlines that you could instantly lose all money for your business over $250k in bank.  You could wake up the next day and have $0 to pay your employees, buy supplies, and pay your rent. It only takes one domino to fall to start the panic. Then another bank fails, and then another.  Soon we have a full on nation wide bank run that sends us back to 40% unemployment like the Great Depression.  Does fear and greed ever make rational sense?  It doesn't have to, but it can happen when people start to panic.[/quote]

You are a small business owner in CA? I’m a small business owner (maybe more midsize now)in MD but I don’t fear a collapse. If you are that concerned, diversify your bank accounts.[/quote]

You, personally may not fear a collapse, but Sandy Spring bank in Maryland has now been flagged as having a similar risk as SVB, if you didn't know.  How many local businesses have their money in Sandy Springs?  It's not easy to diversify your bank accounts when you have several million dollars or more for your company and you don't have an army of accountants at your small company to keep track of all of the finances.  It also makes financial reporting exponentially harder.  Also, it's not just business owners in CA harmed by the failure of SVB. Many companies across the country had used SVB for starting their companies. Small time biotechs, for example, used SVB a ton for financing and banking.  They're all over from Boston, to Research Triangle, to even this area. [/quote]

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