The second largest bank failure in U.S. history just happened; Ga. professor shares financial insights

ALBANY, Ga. (WALB) - With the collapse of Silicon Valley Bank, questions many people may have is What is the state of banks nationally and what is the state of the economy? WALB’s Jim Wallace sat down with a finance professor from the University of Georgia to give us some insights.

I know everybody’s asking right now what’s going on with the banking world and how’s it going to affect Georgia’s economy.

“Thanks for having me on. So what’s going on with the banking world is that on Friday we had an old school, old time bank run on the Silicon Valley Bank of the sort of mid-size upper large mid-size bank and there’s been a lot of you know, a lot of of uncertainty in the market since then. The Fed is and the treasury taking a lot of corrective action which has stemmed a lot of that uncertainty. But I think people are still a little skittish,” Dr. Malcolm Wardlaw with UGa’s Terry College of Business said.

The banking system in Georgia and across the country, is it secure?

“Yeah, I think the banking system is is quite secure. I think, particularly if you’re an individual and there’s literally nothing to worry about. If you have deposits under the CAP, there’s never been anything to worry about. I think even for small businesses that have, you know, have deposits on over the CAP now that the Fed has taken action to sort of. You know, make an emergency backup on those. I think those are probably fine as well,“ Wardlaw said.

A CAP is a set limit on some form of income, interest, fees, loan or benefit, according to Cornell University.

Obviously, the people who were thinking about retiring or retiring right now have concerns as well. What do you see in the future coming up?

“Yeah, that’s right. So you know in terms of people’s deposits and sort of the health of the banking system, you know your deposits are fine. I think the one thing that I would worry about is that, you know, maybe credit will get a little bit tighter over the next coming months. So you know, if you’re an individual, there’s probably not much to do or sort of worry about. I think if you’re as business, you know, it’s probably worthwhile making a few calls to the other banks. The only bank with one bank, and, you know, sending a gift basket to one of their account managers. Again, not to worry about your deposits, but just to, you know, kind of worry about your credit needs going forward”

Do you see recession getting worse, better, or staying about the same in inflation?

“Yeah, those are questions that I am sort of terrible at speculating at. I don’t think things are going to get particularly bad. I said in this Q&A with Georgia that this kind of smells a lot more like, you know, Texas. And then in the late 80s or early or you know or early 90s more than it does the massive 2008 financial crisis. So things will probably stabilized, but they probably won’t get kind of 2008 bad.”

Copyright 2023 WALB. All rights reserved.