Small banks lost at least $108 billion following SVB collapse, community-owned financial institutions urge the government to step in and provide solutions as customers transfer funds to larger banks.
A security guard looks out a door as customers line up at Silicon Valley Bank headquarters in Santa Clara, California on March 13, 2023.A security guard looks out a door as customers line up at Silicon Valley Bank headquarters in Santa Clara, California on March 13, 2023.The Senate Banking Committee is probing federal regulators this week to understand what led to the largest U.S. banking failure since the 2008 financial crisis and the second-largest ever.
The data released last week from the federal reserve showed that in the week following the collapse of SVB, small banks lost a total of at least $108 billion. Small banks and community-owned financial institutions often work with people of color who are unable to get funding from America's largest banks.
Some leaders of these smaller institutions are worried about the future of their businesses, as customers transfer their funds to presumably safer and larger banks. They are also asking the government to step in and provide solutions, and they are urging their customers to continue trusting in their missions and businesses.Carlos Naudon is president and CEO of Ponce Bank in Bronx, New York, a minority depository institution serving communities of color; most of its customers are Latinx.
When asked what his biggest concerns are, Naudon said:"We are hampered by the lack of funding for vehicles to support the economic growth of our communities."The average asset size is $400 million, but many of their clients often cannot get financial support from America's large banks. So, they turn to their community banks.
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