Companies and investors in the Triangle are feeling the effects of two back-to-back bank failures.
Durham-based financial institution SJF Ventures managing director Dave Kirkpatrick said 10 of the 50 companies he works with had money in Silicon Valley Bank. Kirkpatrick said shey were locked out of their accounts when the California-based bank collapsed.
“We have companies that had payroll due this week, had payables due, etc.,” Kirkpatrick said.
SJF Ventures helps start-up companies get money for their mission.
“We invest in solar, efficiency, health, and education,” Kirkpatrick said.
Kirkpatrick said there’s a sense of relief after the federal government has stepped in to guarantee the bank’s customers will have access to all their money.
“There were a lot of companies that would have possibly gone out of business if this action had not occurred,” Kirkpatrick said. “So, we’re delighted with it and just want stability in the banking system so we can all do our jobs.”
The collapse of SVB and New York-based Signature Bank raises concern about that stability.
Mark Yusko leads Morgan Creek Capital Management in Chapel Hill as the company’s CEO.
“This is really just a crisis of confidence,” Yukso said. “So, for people with money in local banks – the big local banks we all know and love like Bank of America and Truist and Wells Fargo – they’re in great shape.”
Anyone with $250,000 or less in the bank is insured by the Federal Deposit Insurance Corporation.
University of North Carolina at Chapel Hill Kenan Institute Chief Economist Gerald Cohen said the risk of a repeat of the 2008 financial crisis is extremely low.
“I’m not running to the bank,” Cohen said. “I would not be running to the bank. I would just say this is really an isolated event.”
The Federal Reserve has created a new Bank Term Funding Program. It is expected to help banks and credit unions guarantee they’ll have the money to cover all deposits in case there are any more bank runs.
