Regions Bank CIO talks recent bank collapses

MONTGOMERY, Ala. (WSFA) - The closure of Silicon Valley Bank and Signature Bank last weekend has many Alabamians worried if their financial institution could be next. While banking institutions here in our state have made it clear they are in excellent condition, many still have questions.

Fears over the closures have been felt across the country. As a result, the Federal Reserve, FDIC, and Department of Treasury have taken emergency steps to ensure customers have access to their deposits.

“We feel that they have done the right things to ring-fence the bad actors and the challenging issues associated with those entities,” says Alan McKnight, Chief Investment Officer for Regions

Here in our state, banks want to reassure Alabamians that they are a safe place to keep your money. However, McKnight says it is important to understand what happened last weekend was a due to a bank run exacerbated by social media.

At its core, though, it’s as simple as a bank run in terms of deposits being taken out too quickly and the institutions being unable to process that.

While some comparisons to other market events are being made, McKnight says it is very different, “History doesn’t repeat itself, but it rhymes. And that’s what’s happening right now, that rhyming convention of when we’re scared when we’re concerned about the future, how do we react?”

With the volatility in stocks, bonds, and other assets, McKnight says it is important for investors not to panic.

“People react in a way that’s pretty consistent, which is, we’re going to sell whatever we can, and they’d have to cash. And unfortunately, that’s one of the worst decisions you can make. Because inevitably, it’s punitive, longer term, but it feels really good at the time,” stated McKnight

McKnight says the single greatest decision you make in many cases is not taking action and staying the course. It is essential to keep in mind your portfolio is built to withstand these types of pressures. It doesn’t mean that it’s not hard, but that’s precisely why work is done on the front end in terms of scenario analysis.

The Alabama Bankers Association and the state banking department says such failure would not happen in Alabama, with banks having very diverse clientele and being regulated at the state and federal levels.

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