Many often joke about the impossibility of doing anything 'in this economy.' And while a good laugh helps alleviate the constant stream of anxiety over the state of the world, the economy is even putting serious stress on small banks.
With the collapse and failure of Silicon Valley and Signature Bank, the government rushed to stop a cascading bank failure. Even with most Americans' fears subdued, smaller banks still feel the pressure. Why is this the case?
Small banks and credit unions do nearly 40% of all lending in the country. With the failure of respected banks, others become more cautious. Lending becomes restricted, mortgage applications are scrutinized more closely, and banks tighten their controls on other areas of banking.
All of these restrictions and heightened scrutiny have a ripple effect on the economy. If small banks that control almost half of our money are more cautious with lending, the economy slows down. A slow economy hurts Black wallets.
As big banks stumble, paying attention to what's happening in smaller banks is vital. Even those of us who choose not to use the traditional banking system may have loved ones affected by this instability. Staying on top of banking news can help keep our money safe.