In the midst of her first few months in office, Governor Maura Healey is facing a bank collapse that could have far-reaching consequences for the state of Massachusetts. Silicon Valley Bank, which had surpassed $5 billion in deposits as of mid-2022, experienced a shocking crash that is now threatening everything from local startups to affordable housing. While the federal government has guaranteed all deposits, the economic and political fallout from the collapse is only beginning.
The Healey administration spent the weekend in talks with industry leaders, state lawmakers, and congressional members to find quick solutions for issues such as helping businesses meet payroll. However, the aftermath of the bank’s failure has just begun. Most regulatory action will occur at the federal level, where disagreements over the cause of the collapse and the path forward are rampant. Democrats like Sen. Elizabeth Warren are blaming the Trump-era rollbacks of Dodd-Frank banking regulations, while former Rep. Barney Frank is attributing the failure to cryptocurrency panic.
At home, customers are concerned, lining up outside SVB’s branches in Wellesley and Beverly to withdraw their money. Beyond the tech sector, businesses are also doing damage control, as the bank's acquisition of Boston Private Financial Holdings meant that its Massachusetts branches were serving housing developers, nonprofits, and even charter schools.
According to Yvonne Hao, Healey's economic development secretary, the state is not yet out of the woods. She said, “I think [the bank collapse] is going to have a lot of aftershocks and reverberations here in Massachusetts. … And as we feel those aftershocks, there may be other ways we want to support these companies.” Hao also mentioned that the collapse of SVB would impact startups’ ability to survive, making it even more difficult to start or grow companies in the state.
SVB’s collapse is a cause for concern in an already uncertain economy, especially as the state focuses on tech, life sciences, and innovation. However, Hao believes that the Healey administration will get even more creative when it comes to driving longer-term economic growth, partnering with communities to find ways to support affected companies.
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