How failed banks impact investors

It can be very unsettling to hear of a bank failure such as Silicon Valley Bank (SVB) last month. Investors may wonder how they should react or if they should adjust their portfolios.

First, a little history lesson to put this into perspective.

When depositors rush to get their money out of a bank that is nancially in trouble, it is called a “run” on the bank. ese are not new and have occurred at di erent levels of severity in the past, the worst in the 1930s during the Great Depression. At that time, there was contagion across many banks, not our current situation. While bank insolvency can often come on the heels of the Federal Reserve Board raising interest rates, that is not solely the cause, according to Mariner Wealth Advisors Chief Economist William Greiner.

Each bank must manage the risk of lending, investing, cash deposits and withdrawals. If any or all of those are out of balance, problems start to percolate. When you have high-risk loans, such as technology

Financial Strategies

start-ups, and you are short on liquidity (more withdrawals than deposits), and the investments backing the deposits decline in value, you have a recipe for failure.

Many banks issue loans on real estate or other business collateral. ey may also use Treasuries to back up deposits. When the Fed raises interest rates, and the value of those Treasury bonds declines, bankers may need to sell at a loss to cover withdrawals. Once this spiral starts, or collateral is devalued due to bad loans, depositors may demand their money causing a run on the bank.

Fed Chairman Jerome Powell remained concerned about in ation when he testi ed before Congress in March. is drove interest rate expectations higher after several interest rate hikes over the last three quarters. is downward

LINDA SHAPLEY Publisher lshapley@coloradocommunitymedia.com

MICHAEL DE YOANNA Editor-in-Chief michael@coloradocommunitymedia.com

SCOTT TAYLOR Metro North Editor staylor@coloradocommunitymedia.com

BELEN WARD Community Editor bward@coloradocommunitymedia.com pressure on bond values and concerns the bank would need to raise capital, caused some technologyfocused venture capital companies to remove funds from SVB. ey may also avoid banks that have not had proper risk management or oversight. ese things created a perfect storm scenario for SVB. It may be wise to stay with large institutions commonly known as “too big to fail” due to their backing by the Fed. Large banks may actually bene t from depositors moving money to them from small banks in amounts not covered by the $250,000 limit for FDIC

It was very fortunate that a contagion was avoided, as the U.S. government response was swift and e ective. Once the facts were released and average depositors realized they were not involved in a bank that does high-risk lending, some of the pressures eased.

Investors will likely review their portfolio to make sure they are not invested in small banks in the venture capital space or have heavy exposure to commercial real estate.

STEVE SMITH Sports Editor ssmith@coloradocommunitymedia.com

LINDSAY NICOLETTI Operations/ Circulation Manager lnicoletti@coloradocommunitymedia.com

TERESA ALEXIS Marketing Consultant Classified Sales talexis@coloradocommunitymedia.com

AUDREY BROOKS Business Manager abrooks@coloradocommunitymedia.com insurance.

Jimmy Stewart as George Bailey in “It’s a Wonderful Life” was able to instill trust in his customers to survive a run on his bank during the Great Depression. In real life during that time, the Emergency Banking Act of 1933 formed the Federal Deposit Insurance known as FDIC. ese days you don’t really run to your bank and can click to manage transactions on your phone. It is not recommended to keep large deposits in any one institution, just as you would not put all of your investments in one individual stock. Work with your wealth advisor to determine the right amount to leave in the bank, which is usually designed for transactions or emergency reserves, not large sums that could be working harder for you elsewhere.

Patricia Kummer has been a Certi ed Financial Planner professional and a duciary for over 35 years and is managing director for Mariner Wealth Advisors.

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Local foragers teach students to cook with wild foods

ere some see weeds, Erica Davis sees ingredients for delicious soups and salads.

“In urban areas, there are a lot of plants that we call weeds that spring up everywhere, that are widely available to people, that are edible and good,” she said.

Foraging is the act of gathering wild plants from nature, generally to be used for food, and sometimes to make other products. For Davis and other foragers, spring means plants are starting to grow –which means kitchens will soon be full of wild foods ready to be prepared in creative

Across the Front Range and in the mountains, several foragers share their knowledge through cooking classes based on

Why cook with wild food?

Davis, who runs a blog called Wild Food Girl, has upcoming classes in Ramah and Fairplay. Her Arvada class this spring has

“I think one of the biggest challenges with edible wild plants is that people don’t always know how to prepare them,” she said. “We all know how to cook spinach, we all know how to make broccoli — but we don’t all know how to cook tumble mustard so that it tastes good. So in my classes, I like to give students that experience of preparing an edible wild plant — or three — in a way that I think they are going to Davis’ classes begin with an hourlong plant walk where students learn the names of plants and safety and sustainability guidelines for foraging. Afterward, she teaches them how to prepare several of the plants they have for-

In the spring, dandelions and wild mustard greens are common staples in her

“People sometimes picture foraging as going out into the forest and picking plants

— and that’s part of it — but I would really encourage people to learn the weeds and make use of them,” she said. “A lot of them are non-native species, so there really aren’t as many ecological considerations with picking them.”

Davis teaches her students to make dandelion green soup from a recipe passed down by an Italian relative. Musk mustard is great in salads, and tumble mustard and field pennycress are fun to ferment, she said.

Beyond the creative and flavorful uses of foraged foods, research from 2019 suggests that wild edible greens harvested in urban areas can be abundant and highly nutritious. The study dubbed wild edible plants “open-source food.”

“This idea that open-source food is out there for anybody to eat and make use of — and then furthermore, it’s organic, it’s free, it’s fresh — I just think that’s a great concept,” Davis said.

Safety precautions

Despite their affordability and freshness, wild plants are not all safe to eat. Crystal Baldwin, who teaches wild plant-based classes at her Golden business, Earth Sweet Boutique, said it’s always important to triple-check plants before you eat them.

“I don’t like to frighten people away from… foraged foods because there’s a lot of very safe ones,” Baldwin said. “But I like them to be aware that there are dangerous, poisonous ones that will kill you, and so it’s important to kind of have an idea of what those might be and what to look out for.”

Baldwin encourages those interested in foraging to start by taking classes, working with local experts and reading about which plants are safe to eat.

She also said it’s important to check if plants are near old buildings that could be contributing lead to soil or if plants have been sprayed with pesticides.