“Very quickly, over the weekend, they came in and said we have to fix this fast. They were having crash course discussions behind closed doors in the White House. US President Joe Biden was involved and he almost came out immediately to say that depositors were going to be protected.”
Reidy explains that these swift actions helped to stave off a contagion effect that could have seen these concerns spread to other banks.
This in turn meant that companies like Rocket Lab with large deposits would still be able to access their funds despite the problems.
As things stand, Reidy says that analysts do not expect this to have an impact on the big Australian-owned banks operating here, given that their investments are quite different.
But that does not mean that New Zealanders have cruised through this financial calamity unscathed.
“The international stock market tremors certainly affected us here,” says Reidy.
“Our stock market on Monday was down about half a per cent or so, and it was down even more at the beginning of the day.”
Given the issue is still being resolved the markets could yet still face some uncertainty in the coming months.
So what does this mean in the longer term for the global economy? Are any other banks also at risk of falling over? Are we facing the prospect of another GFC? And is it really a good thing when Governments step in to help banks through a crisis?
Listen to the full episode of The Front Page podcast to hear Reidy elaborate on all these issues.
