Silicon Valley's recent bank failures may affect the travel industry.
silcion bank failures affecting travel and flights

Eager travelers in the next coming months may want to hold off on their dream vacations while the banks figure out how to put money back into customers’ accounts. 

The start-up community has been rocked by a series of bank failures that have been the center of attention in the news lately. Last week, Silicon Valley Bank (SVP) and Signature Bank collapsed following a rush of client withdrawals, leading to their seizure by federal regulators. 

As a result of these events, CBS travel expert Peter Greenberg predicts a potential drop in travel prices. While that sounds positive, if there’s no money in the banks, then there’s no sun and sand on a secluded island. 

Greenberg shared, “People are worried. And when they’re worried, they tend not to travel,” adding, “So you’re seeing at least in the short-term reservations now, a big softening, and the airlines all the algorithms that the airlines used to project demand and set prices, they go out the window again.”

It is important to note that airfares usually fluctuate throughout each day of the year, even during unforeseen events like the pandemic and, now, possibly due to bank failures.

What happens next? 

The Federal Reserve, the U.S. Treasury Department, and Federal Deposit Insurance Corporation went beyond the standard insured deposit limit of $250,000 and guaranteed all deposits at Silicon Valley Bank and New York’s Signature Bank, which was seized last week, Sunday.

To avoid the pressure of selling bonds at a loss and to maintain financial stability, banks will have the option to borrow money directly from the Fed to handle any sudden increase in customer withdrawals. A move that will hopefully give customers more peace of mind when paying their bills and possibly planning future travel.

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