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Happening Tuesday
Good Day Wake Up anchor Tashanea Whitlow has the story.
WASHINGTON, D.C. - Two congressional committees are set to begin hearings Tuesday in Washington, D.C. on the recent collapse of two major banks.
Lawmakers want to know what went wrong, and how to stop it from happening again.
The Senate Banking Committee is expected to grill top U.S. bank regulators after the failure of Silicon Valley Bank and Signature Bank, and the near collapse of First Republic Bank, to prevent future failures.
Silicon Valley Bank and Signature Bank are two of the largest bank collapse in U.S. history. It comes after First Citizens acquired most of Silicon Valley Bank, including the deposits and loans. The feds approved the purchase, and depositors became customers, but they are still highly alert.
A new study by the Social Science Research Network suggests 186 banks could fail, just like Silicon Valley Bank, if half of the depositors withdraw their money.
Here's why: the feds aggressively hiking interest rates to bring down inflation is impacting the value of bank assets like government bonds and mortgage-backed securities, therefore, reducing the banks' profitability and financial stability.
There are 4,700 banks insured with FDIC. Unlike insured depositors, uninsured depositors could lose their deposits if the bank fails. Financial literacy expert Suzanne Norman from Alliance For Lifetime Income said now is the time for a financial checkup.
"The bank deposits are just under $250,000 per person per bank, if it's a couple, it's $500,000, said Norman. "Try to look at spreading it around to different member banks. For the second checkup, revisit your financial plan, which is critical now. See where you are. If you're nearing or in retirement, remember diversification is two things: it's diversifying your asset classes and diversifying your income sources."
Norman also said income from social security, pension, and annuity, will provide peace of mind. The House Financial Services Committee will meet with top regulators Wednesday.
The hearings are expected to be tense, at times, with several key players up for election next year. Former bank executives are also expected to testify at a later time.