Nationwide bank failures could pose challenges to personal loans, small businesses

Although the past two weeks were marred with the largest bank failures since the Great Recession, the Federal Reserve continued to raise interest rates that could ultimately strain the average consumer.

>> PREVIOUS COVERAGE: Silicon Valley Bank collapse: What it means for your money

The federal reserve hiked interest rates by another percentage point, marking the ninth straight rate increase since March of last year.

The move comes after large billion-dollar banks failed throughout the United States and across the globe, most notably Silicon Valley Bank and Signature Bank.

>> PREVIOUS COVERAGE: Silicon Valley Bank shut down; FDIC creates new bank to protect insured depositors

News Center 7 Anchor Nick Foley previously covered the events leading up to Silicon Valley Bank’s failure. The bank failed to raise enough money from third-party investors, causing the FDIC to shut down the financial institution.

The collapse left “high net-worth investors—people who have deposits of greater than $250,000″ without a “central place to place” their funds, Miami University economics professor EJ Ume told Foley.

Although some of these bank failures affected “high net-worth investors,” Foley looked into how the failures could affect the average American’s wallet. In short, people with less than $250,000 might experience a more difficult time accessing personal loans.

The United States Treasury claimed that most personal investors with deposits under $250,000 had nothing to worry about; however, some, like Shon Anderson of Anderson Financial Strategies, said that the major bank failures could trickle down and pose challenges.

“That’s the bigger issue here. It’s not necessarily access to deposits or losing deposits. It’s the broader economic effect of these banks looking at their balance sheets and really tightening up standards is what we expect,” Anderson, President and Chief Wealth Strategist, said.

Another possible issue is that small businesses might not be able to pay their employees if they cannot access their funds.