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The author seems to allude to a difference between then and now is that it wasn't quite as easy to withdraw money back then, usually you'd have to at least make

The author seems to allude to a difference between then and now is that it wasn't quite as easy to withdraw money back then, usually you'd have to at least make a phone call, or head over to your physical branch. Now you could just open the website/app and do it there, immediately. Another point seems to have been that Silicon Valley bank have a customer base which is tightly knitted, so if any bad news gets shared in the circle, it gets around quickly. Maybe they weren't as popular the last crashes, or as impacted as other sectors, so it would be easier to avoid trouble. But specifically this time, the trouble was related to them, so they got hit the hardest.

rcme 4y ago
Maybe... but SVB's immediate issue is that they lent money when rates were zero and those loans decreased in value when interest rates went up. This type of issue can only be caused by a decade-long zero-interest environment where people stop believing rates will ever go up again. It's interesting how every financial crisis has its roots in the specific economic conditions of the time.
- capableweb 4y ago
  Even so, no matter what cause, if people are unable to withdraw money + won't hear any rumors about a bank run, would SVB be in the scenario they are experiencing today? As it seems like the bank run is what did them in, not whatever magic they did with the deposited money.
  - rcme 4y ago
    Yes. Their issues started when they needed to sell their assets available for sale. This happened because interest rates made it harder to raise money, which caused their clients to draw down their accounts faster than they anticipated. The bank run at the end is more a symptom of SVB's issues rather than a cause. Everything about the bank's problems can be traced back to believing interest rates would be 0 forever.
  - dahdum 4y ago
    They were insolvent before the bank run, that's why they needed the firesale and emergency equity raise to stay afloat. If they were able (allowed) to hide that fact and get the money quietly elsewhere, we may never have known. Or perhaps they would have continued to lose money and fail later, with depositors taking a larger haircut.
yardie 4y ago
> quite as easy to withdraw money back then, usually you'd have to at least make a phone call, or head over to your physical branch. Now you could just open the website/app and do it there, immediately. The main reason some of the other startup banks such as Ramp or BREX exist is because SVB was kind of a dinosaur when it came to cash management. Their online cash management apps were very basic and rudimentary. And they were a lot slower than these new online banks at responding to customer requests. So now you're saying that bank (a very conservative investment bank from what I've been told) was moving too fast?

rcme 4y ago

Maybe... but SVB's immediate issue is that they lent money when rates were zero and those loans decreased in value when interest rates went up. This type of issue can only be caused by a decade-long zero-interest environment where people stop believing rates will ever go up again. It's interesting how every financial crisis has its roots in the specific economic conditions of the time.

capableweb 4y ago
Even so, no matter what cause, if people are unable to withdraw money + won't hear any rumors about a bank run, would SVB be in the scenario they are experiencing today? As it seems like the bank run is what did them in, not whatever magic they did with the deposited money.
- rcme 4y ago
  Yes. Their issues started when they needed to sell their assets available for sale. This happened because interest rates made it harder to raise money, which caused their clients to draw down their accounts faster than they anticipated. The bank run at the end is more a symptom of SVB's issues rather than a cause. Everything about the bank's problems can be traced back to believing interest rates would be 0 forever.
- dahdum 4y ago
  They were insolvent before the bank run, that's why they needed the firesale and emergency equity raise to stay afloat. If they were able (allowed) to hide that fact and get the money quietly elsewhere, we may never have known. Or perhaps they would have continued to lose money and fail later, with depositors taking a larger haircut.

yardie 4y ago

> quite as easy to withdraw money back then, usually you'd have to at least make a phone call, or head over to your physical branch. Now you could just open the website/app and do it there, immediately. The main reason some of the other startup banks such as Ramp or BREX exist is because SVB was kind of a dinosaur when it came to cash management. Their online cash management apps were very basic and rudimentary. And they were a lot slower than these new online banks at responding to customer requests. So now you're saying that bank (a very conservative investment bank from what I've been told) was moving too fast?