Shares of Regional Bank stocks are on the rise despite being downgraded by Moody's investors service prices plunged yesterday following the collapse of california-based Silicon Valley Bank and New York's Signature Bank well Mark Hamrick joins us now for more he's a senior economic Analyst at Bankrate Mark always good to have you.
With us so tell us many people have been talking about fears of a of a greater banking system collapse in the wake of svb how much of that is fear versus reality I think uh you know fear is a powerful emotion and it comes into play in situations like this some people uh remember the great financial crisis.
About 15 years ago and obviously we had an economic crisis that was associated with a pandemic and so there is a tendency for people to think that the current situation will be like the last one and the reality is that very often is not the case that every kind of Crisis or many crisis or major headlines as we've seen in recent days have a.
Composition all their own and I think that is the case here I think this is a unique situation because of the unique time that we find ourselves in well I wonder Mark if you could put this in perspective I mean what role does the regional banking system actually play when it comes to the overall strength of a U.S economy.
Oh it's incredibly important to all the components of the banking system ultimately are important because this is how we conduct our finances as individuals as households for Enterprises non-profits and on down the line and so there isn't one part of that system that is significantly less important than the other they all have.
Important roles to play and so when the Federal Reserve gets into the game as it has in recent days talking about systemic risk that's the reason they don't want to allow a couple of episodes or so to infect the broader system and I think that's why we're seeing a relief rally today although we never want to make too much importance out of one.
Day's activity with respect to the financial markets well Mark do you expect we're already hearing from legislators in Washington talking about the need for more regulations particularly at the regional banking system do you expect that to happen then well uh predicting behavior on the part of elected officials in Washington is uh.
Difficult indeed but I do think that there will be a tough examination on the part of both regulators and elected officials as to what happened uh I think we do know that some of what has happened our unintended consequences associated with years of record low interest rates and then the really aggressive rate hiking that occurred by.
The Federal Reserve almost exactly a year ago and now the question is is the Fed done and maybe it soon will be that's a question to be answered in the coming days but clearly when you have major bank failures of the kind that we've seen things were happening that were out of sight and so the question is can we bring those things into the.
Sunshine in a better way so that Regulators have better visibility and then with that restoration and the continuation of confidence in the system the meantime Mark bottom line should people keep money we need Regional Banks.
I think what we saw on Sunday night Monday morning was an important show of confidence in the banking system on the part of regulators to remind depositors particularly those at insured institutions that their money is safe and indeed The Regulators went up the oven beyond that to make sure that even previously unguaranteed money is safe so.
The key is to make sure that your money uh when you're talking about deposits for example fall below that 250 000 or less a category per individual per account that's true of banks Savings and Loans Credit Unions as well and then it's 500 000 for a couple and as long as you make sure you don't go above that level you should be fine and if you need.
To spread the money around that's one way to do it and of course Financial professionals will help you to make the right decisions with that as well all right Mark Hamrick thank you thank you
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