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Should Central Texans be worried about recent SVB bank failure ?

A local economists says that, despite the collapse of Silicon Valley Bank and Signature Bank, their fallouts won't cause a ripple effect across the banking industry.

TEMPLE, Texas — Anxiety and some uncertainty has stirred up across the United States surrounding the banking industry after a pair of banks collapsed last week. 

Federal Regulators and President Joe Biden are working to assure the fallouts of Silicon Valley Bank (SVB) and Signature Bank don't fall back on the consumer. A local economist says you shouldn't worry and this isn't going to be a ripple effect.

"I don't expect there to be any significant fallout at all from this," said Dr. Ray Perryman of The Perryman Group. "It's not a big widespread sweeping banking situation like we've had a couple of times over the course of my career."

He and his team have been studying events like the second-largest bank failure in U.S. history for decades. He knew SVB was struggling but was shocked to see the rate it transpired. 

"The very quick run on the bank came primarily because of social media," Perryman added. "I mean, people putting feelers out there saying, get your money out of the bank and that was pretty unprecedented and frankly, couldn't have happened back in the old day when you actually had to go to the bank basically to withdraw your money. It couldn't have happened that quickly."

Perryman said the SVB collapse is an unusual situation as the bank decided to take a big investment in bonds and bet wrong loans. He also added that the federal reserve raising interest rates like they have didn't help SVB either.

Plus, it's important to note, SVB had no risk assessment manager for all of last year.

Although the bank collapse is concerning, Perryman said there shouldn't be widespread panic from consumers about this one.

"I don't think most people are going to feel an effect from this," he said. "Obviously, if you happen to own some stock in that bank, you're going to see some losses."

The economist credits federal regulators for getting involved early in the collapse to protect the consumer and investors, as it could have possibly saved the rest of the banking industry, too.

"I think the government made the right decision to step in very quickly and honor all the deposits," Perryman said. "That allowed people to meet their payrolls, allowed people to move forward their business."

Funded by bank fees, the FDIC insures accounts up to $250,000 per person per account and $500,000 for a couple. Perryman said if you are still concerned about your money, you can check on the condition of your bank from time to time.

The good news, despite insurance, Perryman said from what he knows at this time -- banks most Central Texans are using are healthy.

"The banks I'm aware of throughout Central Texas are very well-capitalized banks and banks that have prudent vending and borrowing practices and so again, I don't expect you will see anything of concern."

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