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A big issue is that the customer base is highly correlated/undiversified, in the sense that they're all funded by a small set of VC's telling them to withdraw t
by timy2shoes 4y ago
A big issue is that the customer base is highly correlated/undiversified, in the sense that they're all funded by a small set of VC's telling them to withdraw their money. SVB was uniquely exposed to the whims of a small set of individuals in this manner.
- dehrmann 4y agoAlso that all these customers knew their funds weren't insured.
- hackernewds 4y agoThat is true for every bank. Know that in such a scenario NO bank can virtually back $45B in withdrawals.
- dehrmann 4y agoWhat's different is how many large accounts SVB had. Most banks have a higher share of funds in smaller accounts. For people with less than $250k at the bank, there's less incentive to withdraw all your funds.