WATERBURY, Conn. (WTNH) — The banking crisis has residents contemplating what to do with their money — either stay put or withdraw.
“I refuse to do that,” said Mark Therreault, who lives in Waterbury. “I’m not going to go in a panic mode yet.”
For Eliseo and Alicia Vegas, the decision to withdraw their money from a Webster Bank was due to distrust. However, a financial expert told News 8 that the banking system relies on how trusting depositors are.
“[That’s] confidence people have that their money is going to be there, so they are not rushed to go get it, and when they hear events like what happened at Silicon Valley Bank and Signature Bank it causes some sense of panic,” said David Sacco with the University of New Haven Pompea College of Business.
Silicon Valley Bank’s collapse earlier this month sent shockwaves through the technology industry, leaving companies to decide what to do with their money moving forward.
Banks like Webster Bank in Waterbury have signs by the teller stating that customers are insured for at least $250,000. Sacco said that people who have less than $250,000 in a bank really have nothing to worry about, and people who have more than $250,000 should also have little concern.
“I think at this point, because of what the FED and the FDIC and Treasury have done, the threat of depositors losing money has kind of been taken off the table,” Sacco said.
The Federal Deposit Insurance Corporation said it would make sure all depositors — regardless of money amount — would be insured.
Sacco said the Federal Reserve is in a tough spot while it decides whether to raise interest rates to fight inflation, or slow down the increase because of the threat of a financial crisis.
“Raising rates is sort of what led to this problem in the first place, so you can see this circular pattern developing,” Sacco said. “So, I think the consensus now probably that the fed will only raise rates 25 basis points tomorrow.”