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Banking crisis did little to tank confidence. It was already in the toilet.

 1 year ago
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Banking crisis did little to tank confidence. It was already in the toilet.

Regional banks can have a powerful impact on the financial system: Sen. Tina Smith
Regional banks can have a powerful impact on the financial system: Sen. Tina Smith
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Rebecca Chen
·Reporter
Thu, March 30, 2023, 5:58 AM GMT+9·4 min read

In the wake of the banking crisis earlier this month, financial planners and wealth advisers reassured clients by email and in phone calls that this turmoil wouldn’t spiral out of control, that their investments were safe.

"We have been posting on social media and making outbound calls to our clients telling them not to expect the failures of a few U.S. banks to cause a widespread financial contagion," Jon Ulin, CEO of Ulin & Co. Wealth Management, told Yahoo Finance.

Several fintechs quickly rolled out increased insurance on deposits beyond the traditional $250,000 guaranteed by the FDIC to attract jittery savers. And smaller banks upped their yields on their deposit accounts to keep customers happy.

They all looked to get ahead of an event they assumed would spook Americans — which appears to not have happened to a great extent, the latest data showed.

This week, an index measuring Americans’ sentiment for the present economy dipped in March, interrupting a three-month streak of increases. But overall, consumer confidence increased during the month, according to the Conference Board survey conducted 10 days after the bank troubles began, led by improved expectations for the future.

Still, that doesn’t mean Americans had their hands over their eyes as the banking turmoil unfolded. Nor does it mean they feel upbeat in general about the economy. The index remains at a reading that often signals a recession is coming in the next year, a level the index has been at for 12 of the last 13 months.

An index measuring Americans’ sentiment for the present economy dipped in March. But overall, consumer confidence increased, according to the survey conducted 10 days after the banking crisis began, led by improved expectations for the future.
An index measuring Americans’ sentiment for the present economy dipped in March. But overall, consumer confidence increased, according to the survey conducted 10 days after the banking crisis began, led by improved expectations for the future.

"I am seeing that a large number of [clients] are afraid of their retirement plan, they are afraid of what is going to happen to their jobs," Kathryn Keane, an enrolled agent and National Tax Practice Institute fellow, said. "Just everybody seems to be worried. It's just very uncomfortable is how I would put it.”

Most Americans weren't ignorant of the troubles enveloping regional banks this month.

Only 17% did not see, read, or hear about the collapse of Silicon Valley Bank (SVB), a study conducted March 22-23 by the Harvard Center for American Political Studies found, with the remaining 83% of respondents reporting they had been exposed to the banking drama to varying degrees.

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