Why Experts Say SVB’s Collapse Shouldn’t Stress Pa Consumers.

HARRISBURG, Pa. — It’s a meltdown some say the federal government should have seen coming.

Dr Pavlo Bruyi, an economics professor at the University of Harrisburg, said Silicon Valley Bank was not ready to return billions to big investors who suddenly wanted out.

“Silicon Valley Bank had a smaller share of total deposits held in cash compared to an average bank,” Dr. Bruyi said.

Dr. Fariborz Ghadar, Schreyer Chair in Finance at Penn State University, says no bank could have prepared for what happened, but SVB’s technology investments made it even more vulnerable to rising interest rates.

“Deposits are huge, assets are volatile. On the one hand, they are big accounts, on the other, if they feel like it [a] bank is in trouble, they can withdraw everything in seconds,” Dr. Ghadar told FOX43 News.

While banks with a similar structure risk suffering the same fate, experts said Commonwealth banks should be safe.

“I don’t think the average regular consumer needs to worry,” Dr. Bruyi said.

“If you live in Pennsylvania, you can be sure that your banks are relatively safe,” Dr. Ghadar added.

This is because most Pennsylvania bank accounts are fully insured.

The FDIC covers banks up to $250,000. Dr. Ghadar said 75% of Pennsylvania banks have less than $250,000. Meanwhile, only 6% of SVB’s accounts were below $250,000, leaving some investors out of the millions.

The federal government steps in to cover those losses, but the collapse sparks new conversations on Capitol Hill.

That could mean more regulations, ensuring banks can handle the stress of fluctuating interest rates and large withdrawals.

“The regulators, who were supposed to check all these things, may have done a good job. Maybe these medium-sized banks are not so medium-sized and we should have regulations for them as well,” Dr. Ghadar. .

SVB’s parent company filed for bankruptcy on Friday, but experts said it would not impact investors in the bank.

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