Analysis of Google search data reveals that online searches for ‘Is my money safe?’ rose 43% the usual searches of the last few days in the United States on March 13th (PT), as news broke that yet another bank, the NYC based Signature Bank had to close as a consequence of the Silicon Valley Bank (SVB) collapse on Friday, March 10th.
New insights by Financial-World.org reveal that as concern and panic spread among Americans, many took their questions to the web to understand the situation and ensure their savings were safely deposited in their bank after the second-largest bank failure in American history and the domino effect this has caused.
Last night, Americans also searched for ‘What happened to SVB,’ which rose 67% once again as the news broke out, four days after its original spike in searches, and ‘Why banks fail,’ which rose almost 90%.
- What happened to Silicon Valley Bank?
This situation stems from the purchase of billions of dollars worth of bonds in the last couple of years by SVB using its customers’ deposits, a common procedure in the banking sector, but which, as in this case, can lead to disastrous consequences.
These investments are typically safe, but their value fell because they paid lower interest rates than what a comparable bond would pay if issued in today’s higher interest rate environment. Because of this, the bank’s clients, main start-ups, and tech-related businesses began accessing their funds, which inevitably led to the bank having to start selling its assets to meet customer withdrawal requests.
The bank tried to raise additional capital through outside investors but could not find them. Therefore the Federal Deposit Insurance Corporation took over the institution, eventually closing it down.
A spokesperson for Financial-World.org commented on the findings:
“By hearing this news, it is only right that Americans began to question the system and seek answers to their questions, one being if their money is safely deposited in their banks, as demise came to an institution that seems sturdy such as banks but that in reality can be extremely fragile.”
“The real problems started just as people began to worry that SVB wasn’t to trust with their money anymore and therefore withdrew everything they could. As the bank’s clients were mostly businesses, these were incredibly large amounts of money the bank did not have.”
“The President of the U.S., Joe Biden, took matters into his own hands last night by presiding a press conference where he reiterated many times that citizens have nothing to fear, that their money will be available when they’ll need it, and that this disaster won’t need taxpayers’ money to be fixed.”
“The Biden Administration was indeed quick to intervene. However, the fear isn’t behind Americans, as this might only be the start of a larger snowball that might attack the banking system as a whole and the U.S. economy.”