A new analysis says that stress on local and regional banks that caused a greater lending pullback could translate into an extended employment collapse in small businesses and commercial real estate. The think tank Employ America noted that jobs in these economic segments are “already under stress from post-pandemic recovery dynamics.”

That is one reason why the Federal Reserve and Biden administration are looking at the collapse and shuttering of Silicon Valley Bank and Signature Bank as dangerous. Not that SVB and Signature were generic in their operations or that they were deeply tied to lower tiers of banking. SVB specifically, Employ America noted, had a “very particular business model” that was tied to the tech startup ecosystem. Separately, Signature was seen as tied to the cryptocurrency boom. In December 2022, the institution said it would shrink deposits tied to crypto by $8 billion to $10 billion, according to Yahoo Finance.

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Erik Sherman


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