Julie Haener (00:00):
I’m Julie Haener.
Mike Mibach (00:00):
And I’m Mike Mibach. The bank’s collapse, the biggest since the 2008 global financial crisis, and today, President Biden did say, “All deposits are safe and taxpayers will not be responsible for the bank’s losses.” KTVU’s Tom Vacar joins us live from the now federally run bank with the latest, Tom.
Tom Vacar (00:18):
Well, it’s a bank that’s actually getting quite special treatment because there’s no limit on the amount of money that they will insure, and the reason for that is really quite simple. Much of this money goes to tech startups and that is the future of American innovation. As they stood in line Monday morning at Silicon Valley Bank, depositors turned out to be the winners in the sudden collapse of Silicon Valley Bank last Friday.
Sangeeta Dey (00:43):
It was unexpected and even people in the business for 30 years said they have never seen anything like this.
Tom Vacar (00:48):
On Monday, the bank reopened with a line of nervous depositors wanting to see, as the president had promised, that all their money would be paid out to them. This is a godsend to many high-tech startups who might not have been able to make their financial obligations
Ganesh Krishnan (01:04):
The money here, I have a startup, it’s really to run the company and to pay the employees and to build the business, right? That’s what the funds are for.
Sangeeta Dey (01:13):
We still owe a lot of money to people we have hired, and I’m here for them actually, not for myself right now. So, I know the money’s there. We do have that assurance, but access is more important right now, which we don’t have right now.
Terry Connelly (01:29):
The losers are the management, the senior officers, the shareholders.
Tom Vacar (01:34):
Terry Connelly is former dean of the Golden Gate University Business School and a former investment banker. The question is, is this the only bank in similar trouble?
Terry Connelly (01:44):
The federal authorities have promised to back them up fully in the affected banks, and we don’t quite know the roster of the affected banks yet.
Tom Vacar (01:56):
This bank failure raises two important questions. One, should the federal limit on deposits be raised or should there be no limit at all? We certainly can do that, but the cost of doing that is going to make that insurance much, much more expensive. That could include restricting the amount of availability of deposits to customers in the same way the stock market stops or delays trading on stocks to prevent crashes. If Uncle Sam had not guaranteed all those deposits, even humongous ones, the whiplash would’ve been devastating to the US innovation economy.
Ganesh Krishnan (02:32):
If you didn’t have access to more than 250K, then that would probably be the end of a lot of startups.
Tom Vacar (02:38):
Experts say overall, the banking system is very robust and will be able to pay all depositors. Having said all that, you can bet that there will be investigations not only of these banks that were involved in this problem, but really of all banks, to make sure that they can withstand all the stress tests and things that they need to do to survive. And most of them, virtually all of them, really can. Tom Vacar, KTVU, FOX 2 News.
Mike Mibach (03:05):
All right, Tom, thank you for that and customers at-