As midsize banks bleed deposits, consumers and businesses will suddenly find credit hard to come by.
Photo-Illustration: Intelligencer; Photo: Getty Imagesto contain the fallout from the collapse of Silicon Valley Bank. Those efforts saved SVB’s depositors from the threat of bankruptcy and averted a domino rally of catastrophic bank runs. Nevertheless, the SVB crisis is still weighing on America’s small and regional banks, increasing the risk of a near-term recession in the process.
But SVB’s collapse changed that. Even though the government bailed out the bank’s depositors , days of national news coverage focused on the prospect of firms being wiped out for storing their cash with a bank that was“small enough to fail” led many Americans to reconsider their own banking practices. At the same time, as spooked investors sold off the stocks of regional banks, depositors at those institutions started fretting for their money’s safety.
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