(The Center Square) – Missouri has no investment in one of two failed banks, and the Missouri Bankers Association on Monday characterized the collapses as an extreme exception.
“The State of Missouri has no investment in the failed Silicon Valley Bank in California,” Republican Missouri Treasurer Vivek Malek posted on social media on Monday. “The State Treasurer’s Office continues to monitor the situation, and Missourians should be assured that this office’s conservative policies are protecting their hard-earned tax dollars.”
A spokesperson for the Missouri treasurer did not immediately return The Center Square’s inquiry about whether the state has any investments in Signature Bank, which also failed.
The Missouri Bankers Association believes the failures of Silicon Valley Bank in California and Signature Bank in New York don’t reflect the performance of the sector in the financial services industry.
“The recent bank closures in California and New York appear to be outliers; they do not reflect the norm for banks across Missouri and America,” the organization said in a statement on Monday. “The closed banks had significant exposure to volatile sectors, including cryptocurrency. Missouri banks have limited exposure to these types of industries.”
The two banks were taken over by government regulators during a three-day span. Silicon Valley Bank, with approximately $210 billion in assets and the 16th largest in the nation, was taken over by California regulators on Friday, according to several media reports.
On Sunday, regulators in New York state seized Signature Bank. The Federal Deposit Insurance Corporation reported Signature Bank had approximately $110 billion in total assets and $82 billion in deposits as of December 31, 2022.
The FDIC, the Department of the Treasury and the Federal Reserve issued a joint statement on Sunday stating the deposits of both banks will be guaranteed by the federal government. The FDIC insures funds in bank deposit accounts up to $250,000. FDIC insurance is funded by premiums paid by the banking industry, not taxpayer dollars.
“In the 88-year history of the FDIC, no one has ever lost a penny of an insured deposit,” the association said. “Customers are encouraged to contact their Missouri banks with any questions.”
Signature Bank had 40 branches throughout New York, California, Connecticut, North Carolina and Nevada. Several media outlets reported its demise was caused by consumers panicking and making withdrawals after Silicon Valley Bank’s problems. An FDIC media release said banking activities will resume today, including online banking, and loan customers should continue making payments.
Several media outlets reported Silicon Valley Bank’s capital assets were invested in long-term items, such as mortgages. When the Federal Reserve raised interest rates last year, causing stagnant or declining property values in the market due to the higher cost of loans, the bank’s value declined.
The association also highlighted the bank closures are the first by regulators in almost three years.
“Missouri’s banking industry remains a source of strength and stability,” the association said. “Banks in Missouri maintain strong capital levels, ample liquidity and record levels of loan loss reserves, allowing them to successfully absorb economic shocks. Missouri bankers take pride in their strong relationships with customers and are invested in the economic growth and prosperity of their communities and the state.”
Reuters reported a class action lawsuit was filed on Monday against Silicon Valley Bank, its chief executive officer and chief financial officer in federal court in California.