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The run on the Silicon Valley Bank last week spurred concerns about a banking meltdown on America’s economic horizon. However, CNBC contributor and financial expert Ron Insana, speaking on WOR 710’s Len Berman and Michael Riedel in the Morning program, says the concerns are not as grave as they seem.
Insana broke down the jittery reaction by investors in layman’s terms. “Depositors got nervous and started pulling money out of the bank,” he told Berman and Riedel, “and there was literally a run on Silicon Valley Bank, an old-style, ‘It’s a Wonderful Life’-type run, except you could do it by computer or over the phone. You don’t have to stand in line at the bank.” Over the weekend, however, federal regulators stepped in to protect any deposit in the bank, not just deposits up to $250,000.
Insana assuaged fears the run could lead to a meltdown similar to the 2008 financial crisis. “This can be contained, and (the Feds) are creating even new facilities, if you will, to ensure that all depositors have access to their money,” Insana said.
“The federal government won’t allow systemic failure,” Insana further explained. “The government just steps up and provides whatever support is needed in the banking system because, if you let it fail, the economy crashes, and they’re not gonna let that happen.”
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