Some of the world’s most notable celebrities had accounts with the Silicon Valley Bank. These include Sharon Stone and Peter Thiel. Oprah Winfrey is also reported to have had an account with the SVB. All kinds of rumors are swirling around this incident, including those that suggest Harry and Meghan Markle lost money due to the collapse. But as we all know, the Biden administration has decided to bail this bank and all of its account holders out, providing a full guarantee even beyond the normal $250,000 FDIC limit.
Despite the bailout, this was definitely a shock to the entire US banking system, and people are a little unsettled. Who knows how this situation will play out? One thing is clear: This could have a genuine effect on divorces if spouses get caught up in further bank collapses – but how might divorces be affected by a banking crisis that gets worse and worse?
Money Issues Often Lead to Divorce
First of all, it is worth pointing out that money issues often lead to divorces in the United States. In fact, this is one of the leading causes of divorces – especially during a time of economic uncertainty, high inflation, and rising mortgage rates. But the interesting thing about a banking crisis is that it tends to affect the ultra-rich more than those struggling to pay rent each month. While lower-middle-class couples have been arguing for years over money issues, the rich have seen their assets appreciate in value with higher inflation.
But a banking crisis could change this, creating new arguments and disputes among high-net-worth spouses that might have lost everything after leaving their money in the wrong bank account. Of course, these losses were covered in the case of SVB, but it is not clear whether the Biden administration will want to continue to bail out banks – or whether they even have the ability to do so.
Another interesting point is that pension funds could evaporate with further banking crises. On March 14th of 2023, it was reported that Dutch pension funds had lost money due to the bankruptcy of Silicon Valley. Two Dutch pension fund managers were forced to admit that they had lost part of a fund worth 130 million euros. It is not clear how much they lost when SVB went under, but this shows how serious a banking crisis can be and how far its effects could reach.
Perhaps most notably, investors are not protected by Biden’s bailout. This means that these Dutch pension funds really did lose out because of SVB’s collapse, and no one is going to reimburse them for their losses. A divorcing elderly couple in the United States could face the same issue with future banking collapses. Five state pension funds lost a further $139 million after the collapse of the SVB. One Ohio public pension fund for teachers lost more than $27 million.