Well a defense might be to increase their liquidity by selling those treasury bills, which would drive their price even lower, making other banks also be illiqu

Well a defense might be to increase their liquidity by selling those treasury bills, which would drive their price even lower, making other banks also be illiquid on paper. So yeah I imagine all the banks nervously looking at eachother. Who is going to pussy out the first and cause them all to tumble over.