MILTON — Paying the seven employees at the Milton Public Library is typically a pretty straightforward process.
“I run payroll on Friday for the hours worked during the week,” said library Director Kris LaVanish. “Then, the following week, say on a Tuesday, the net amount comes out of our bank account, followed by the taxes on Wednesday or Thursday.
“Usually by midnight on Friday, everybody gets paid through direct deposit.”
However, what was different about this past Friday was that Silicon Valley Bank (SVB) — a Santa Clara, Calif., lender with a headquarters more than 2,700 miles away from Milton — failed, marking the largest bank failure since the 2008 financial collapse.
“On Saturday, when one of my employees texted me and said she didn’t get paid, I literally had no idea what was going on,” said LaVanish.
As she would come to discover over the next 24 hours, the library’s payroll and accounting software provider — a company by the name of Patriot Software — banked with SVB. This meant that the Milton Public Library — along with the tens-of-thousands of other customers which relied on the online payroll company — suddenly didn’t have paychecks for employees.
“I’m a paycheck-to-paycheck person,” LaVanish said. “There’s so many people that live paycheck to paycheck. It’s a big deal.”
As of Sunday, there was already a public group on Facebook entitled “Patriot Software Silicon Valley Bank debacle,” in which 27 members shared LaVanish’s frustrations and questions surrounding their inability to pay employees.
“I don’t have enough money to cover payroll in petty cash or anything like that, but I also can’t afford to not pay my employees,” said LaVanish. “All I wanna do is take care of everybody here. And it’s frustrating because I don’t know how to do that.”
She was able to provide employees with paper checks later Monday afternoon.
On Sunday, March 12, the Department of the Treasury, Federal Reserve, and Federal Deposit Insurance Corporation (FDIC), issued a joint statement explaining that measures had been taken to fully protect all depositors. In a subsequent update, Patriot Software shared that “all funds associated with Silicon Valley Bank (SVB), including all payroll dollars in process for Patriot Software clients, will begin being released as of Monday, March 13.”
However, in an update provided just after noon on Monday, Patriot Software stated that the “timing of payments is still to be determined,” and that “deposit files scheduled to be processed on Friday, March 10 or Monday, March 13, will not be processed today.”
For LaVanish, the entire ordeal has also raised broader questions about the stability of America’s financial institutions.
“If you think about how this affects seven employees in rural Pennsylvania, then think about what is happening to people all across the country,” said LaVanish. “It makes you think about how tenuous the whole system is.”
For Joe Moralez, Milton Borough Council vice president and president of the library’s board of directors, the Silicon Valley bank failure serves as a kind of inflection point for the American banking system.
“SVB is a $200 billion dollar catastrophe that has trickled down to affect the payroll of our local small businesses who could not even fund their direct deposits this past Friday like the Milton Public Library,” said Moralez, via an email. “Now, the U.S. must stop the spread of this contagion and restore confidence in banks in the short-term as our elected officials move toward bolstering our local and regional banks to provide the services and oversight that Pennsylvanian’s savings, mortgages, payrolls, and investments demand.”
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