NORFOLK, Va. - A local economist says there's no need to panic in Hampton Roads following the collapse of two banks nationwide.
Silicon Valley Bank and Signature Bank abruptly shut down, leaving people with money in the banks in a panic.
On Monday, President Biden announced the federal government is taking steps to ensure people with deposits don't lost their money.
"The fear is that bank runs beget more bank runs," said Dr. Robert McNab, an economist at Old Dominion University, who says the federal government's actions are meant to calm markets.
"Right now, it looks like the contagion is limited," he said. "If this actually works, then by Friday we'll be look at this and breathing a sigh of relief."
Most banks are insured through the Federal Deposit Insurance Corporation (FDIC and if a bank fails up to $250,000 of someone's deposit would be protected.
In the cases of these banks, the federal government is ensuring all deposits are recovered through fees banks pay, not through tax dollars.
"Some of this volatility is predicted. We just don't know where it's going to fall," said McNab. "The good news for Hampton Roads is that many of our banks are local and well capitalized. We don't have the sort of unique features that Silicon Valley Bank had."
Hampton Roads as seen a bank collapse, as well. The Bank of the Commonwealth collapsed in 2011 when bank executives were accused and later convicted of fraud.
"If we look at local banks when they collapse, typically, it's poor investment decisions or some type of incompetence," said McNab.
For now, he doesn't think people need to get too worried. "If you're sitting at home tonight wondering if your money is safe at the local bank, you probably can rest assured that it's as safe as it can be," he said.
