BUFFALO, (N.Y.) — The effects of a bank collapse on the other side of the country have trickled down to New York. Silicon Valley Bank collapsed on Friday, while New York-based bank, Signature Bank, collapsed 48 hours later. These events over the weekend left customers and investors in limbo.
"The shareholders who own stock are wiped out. The bondholders are wiped out," Tony Ogorek, founder and president of Ogorek Wealth Management, said.
Ogorek said federal officials rushed in to seize both banks. This ensures that people will have up to $250,000 fully ensured. On Monday, there has been an effort to assure banking customers that their money is secured. State and federal regulators also said this is not a bailout and does not involve taxpayer money.
"The FDIC and another government facility is going to protect anyone who had deposits in those banks," Ogorek said.
He said investors and depositors tried to pull $42 billion out of Silicon Valley Bank which contributed to the collapse. Ogorek said there is one reason for the pull.
"And that is trust. And when depositors lose that sense of trust that's when we have those runs of the bank that happen," he said.
This collapse caused processing payment delays for some of the 7.2 million Etsy sellers. While some Buffalo Etsy sellers said they aren't impacted by this, one Williamsville seller is. She did not want to go on camera but shared this email from Etsy with 7 News.
Hi there,
We wanted to let you know that there is a delay with your deposit that was scheduled for today. This delay was caused by the recent developments regarding Silicon Valley Bank, who Etsy uses to facilitate disbursement to some sellers. We are working with our other payment partners to issue your deposit as soon as possible.
We apologize for any inconvenience or disruption this may have caused. We know that you count on us to help run your business and we understand how important it is for you to receive your funds when you need them. Please know that our teams are working hard to resolve this issue and send you your funds as quickly as possible.
No further action is needed from you at this time. Please feel free to reach out to our Help Center 24/7 with any questions you might have.
Etsy said Monday, those payments will resume.
"The government's primary goal right now is to instill faith in the banking system," Ogorek said.
Following the fall of Signature, Governor Kathy Hochul called it a 'tumultuous' weekend but reassured depositors.
"The banks are open. Everything is fine, calm. Now the FDIC is in charge and will be communicating any details about the future," Gov. Hochul said.
Meantime, Ogorek said at this point there should be no concern, but it is a wait-and-see situation at the federal level.
"It's going to be an issue of whether there is a private sector solution, whether there are going to be increased assessments from the FDIC, whether there's going to be more attention to paid regulation," he said.
KeyBank did release a statement to 7 News following two banks collapsing.
Key is well capitalized, with strong credit quality and deposit profiles. KeyBank has a moderate risk profile with a wide range of funding sources and a very diversified deposit base. Regional banks like KeyBank are subject to a high level of regulation and take part in annual stress tests where banks have to prove their durability through a myriad of negative economic scenarios. We are actively monitoring the situation and are not seeing anything unusual in terms of deposit flows across our businesses. In fact, our team has mobilized quickly to support and onboard many new, high quality clients.
“Key is a nearly 200 year old financial institution with safe, sound and strong fundamentals. While the events of the last few days have been disconcerting, it’s important to note that they are limited to small number of niche banks with unique, highly concentrated financial profiles,” said Chris Gorman, Chairman and CEO, KeyCorp. “KeyBank, as well as other regional banks, are in a much different, more diversified and stronger financial position. Despite the recent events in our industry, KeyBank is well positioned to continue supporting all our clients with a full range of financing options while maintaining our moderate risk profile and delivering value to our shareholders.
