(Source: MIRS.news, Published 03/16/2023) The Michigan State Housing Development Authority and the Department of Treasury are double-checking to make sure the collapse of Silicon Valley Bank and Signature Bank didn't impact their portfolios, but at first blush officials don't believe it did.
“Everything looks healthy at this point, so I think that we’re in pretty good shape,” said MSHDA Chief Financial Officer Jeffery Sykes.
Sykes said the worry is that people could be scared into pulling deposits out of smaller banks and putting them into larger banks, because the authority uses community banks to put out single-family mortgages.
He said the authority falls into a group of deposits of $250,000 and over that are backed by the federal government. He said MSHDA is also making sure that collateral is provided against MSHDA deposits to ensure the investments are on solid footing.
Sykes said he isn’t sure what the long-term effects of the collapse would be, but any consolidation of small banks in Michigan could impact the single-family mortgages offered by MSHDA.
“Hopefully some of the steps that the [Federal Reserve] has put in place, making sure that they’re guaranteeing deposits over that $250,000, will prevent a run on banks,” he said.
The other area Sykes said was being looked at was the MSHDA bonds, because disruptions in the market could move people away from those bonds into treasuries because of worry of financial collapse, but he doesn’t believe it would get to that point.
He said MSHDA doesn’t have any exposure to Credit Suisse, which is also on shaky ground.
“The failure of any bank causes disruptions within the banking community, and that roils through everything,” Sykes said.
Michigan Treasurer Rachel said the investment exposure of Michigan is also extremely minimal and that only a possible 0.005% of the state's portfolio could be impacted.
“There isn’t anything to worry about with that,” Eubanks said.