The U.S. banking sector has been rocked by the news of the collapse of two prominent banks, Silicon Valley Bank and Signature Bank. Both banks were shut down and acquired by the FDIC. After much uncertainty over the weekend, Federal regulators announced that all depositors at both banks have full access to their funds and have established emergency funding to protect depositors at all other banks, if necessary. While averting an immediate crisis, these bank failures have raised concerns regarding the stability of the banking sector and have left many investors nervous.
Safeguarding Your Assets
Our clients’ accounts are custodied at National Financial Services (NFS), a Fidelity company, and one of the largest custodians in the world. Our custodian, in accordance with SEC Rule 15c3-3, often known as the Customer Protection Rule, protects client securities that are fully paid by segregating them and ensuring that they are not used for any other purpose, such as for corporate investment purposes, loans to investors or institutions, or for spending. While this rule does not protect against losses in market value, it helps ensure that customers always have access to their securities.
Impact on Markets
It’s premature to know exactly what the ramifications of the bank failures will be on the economy and financial markets. Conventional wisdom at this point is that the failures will result in further tightening of financial conditions and may accelerate or pull forward the slowing of the economy that was already under way. We will be monitoring the situation and looking for opportunities to both preserve capital as well as take advantage of opportunities as they are presented.
Please let us know if you have any questions or concerns about any of this. We are here to answer questions and offer guidance.
Matt and Andrew