JACKSONVILLE, Fla. – Silicon Valley Bank in California collapsed on Friday forcing the United States federal government to step in and guarantee that customers get their deposits back, making it the biggest U.S. bank failure since the global financial crisis in 2008.
The billions invested in the bank include funds from major companies such as Etsy, which is an online marketplace with millions of sellers.
News4JAX talked to several businesses that have been impacted by the bank’s collapse.
Olga Galushchak, who is a refugee from Ukraine, crafts jewelry out of beads, crystals and stones, and she has been selling her creations on Etsy for years.
“If Etsy will have a serious problem, it will be my problem, too because it’s the only platform where I’m selling my jewelry,” Galushchak said.
Galushchak said so far, her PayPal payments have not been affected.
Another Jacksonville seller who makes custom and printable party decor said her weekly payment from Etsy was scheduled for Monday, but it was pushed back until March 20.
A tax compliance software company emailed clients Monday saying the takeover of Silicon Valley Bank is impacting customer payments and urged customers not to pay invoices until revised payment details and instructions were shared.
Joe Krier of Tidel Flow Trading said the government’s intervention on behalf of SVB depositors has helped prevent more crises.
“A bank in California going under and the most prosperous county in America would certainly be the kind of thing that would get people panicking elsewhere if the Feds don’t do something,” Krier said.
Investor and Jacksonville University finance professor Abdel Missa said the SVB crisis could actually result in benefits for consumers by lowering interest rates.
According to the Federal Deposit Insurance Corporation, the funds for those who had deposits in SVB should be available Monday.
An Etsy spokesperson said less than 1% of its sellers had payments delayed Friday because of the collapse, and they are working to pay those sellers.
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Collapse impacting businesses all across Florida
Etsy wasn’t the only business affected by the bank’s collapse.
Chefs Choice is a small produce company that delivers fruits and vegetables to various restaurants, bars, assisted living facilities, golf course and hotels in Sarasota and Bradenton.
Like many impacted, Friday was payday for Chef Choice employees, but the company employed to handle payroll was unable to process direct deposits because of the collapse.
TT Skardoutos owns Chefs Choice and said the collapse financially impacted his employees who depend on their checks being directly deposited.
“A lot of people are living paycheck to paycheck. They needed money.,” Skardoutos said. “They have automatic withdrawals, car insurance, and house payments. Stuff like that will hit automatically. It’s ultimately going to short them and now they are going to owe more money through bounced check fees.”
Skardoutos ended up writing checks to his employees. US regulators guaranteed SVB customers would get their deposits by Monday, but as of early Monday afternoon, Skardoutos said nothing had gone through.
“I’ve talked with our office manager, and she’s informed me that we have not received anything. The payroll company has already taken money out of my account earlier in the week, but we have not seen it yet,” Skardoutos said.
The collapse of SVB is the largest since the 2008 financial crisis. After that crisis, Congress passed the Dodd-Frank Act, which was designed to prevent future bank collapses.
The act required banks to report specific transactions so that regulators could monitor systematic risks through stress tests. But in 2018, President Trump signed a bill that reduced how often regional banks had to submit to stress tests.
As for the Chefs Choice employees, they might have to get used to receiving written checks from the owner until the business either switches over to another payroll company or remain with the same payroll company as long as that company picks a bank that Chefs Choice is comfortable with.
SVB is a smaller bank compared to the nation’s largest bank.