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> Why would there be an expectation of more of this to come? As a general approximation, all banks would fail if there were a run on them. It's merely a quest
by pgwhalen 4y ago
> Why would there be an expectation of more of this to come?
As a general approximation, all banks would fail if there were a run on them. It's merely a question of how much of a run would be needed. If the panic among VCs that led to the run on SVB were to continue in other parts of the financial system, other banks with shaky risk management could have similar challenges.
That being said, JP Morgan is not going to fail next week. Make no mistake that this was a massive risk management failure on the part of SVB. But large depositors of similar banks are panicking right now (just read HN this weekend), and it's up to banking regulators (FDIC, Federal Reserve, etc.) to calm their nerves by Monday morning.
- pbourke 4y agoNational retail banks are not going to fail. This was a pretty unique circumstance: deposit base had tripled in 3 years, serious failure in risk management, most deposits from business customers well above the deposit insurance limits.
- pgwhalen 4y agoRight. My point in saying "all banks would fail if there were a run on them" is just that if for some reason, every depositor at JP Morgan were to decide to withdraw their deposits on Monday in favor of some other bank, JP Morgan would fail. There are so so many reasons that won't happen, but the statement is true and is useful to keep in mind when thinking about banks and the banking system.