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I believe SVB is going to be relatively unique. Their deposits were highly concentrated in startups. Startups receive funding from a highly concentrated number
by SkyPuncher 4y ago
I believe SVB is going to be relatively unique. Their deposits were highly concentrated in startups. Startups receive funding from a highly concentrated number of funds. This ends up with an unusual concentration of influence and group-behavior.
A very interesting risk in hind-sight, but unlikely to be a wide-spread issue.
- paulgb 4y agoI think you’re right from a rational, look-at-the-balance-sheet point of view, but I think that’s less important than it might seem. If people see other people heading to the exit, they don’t have time to look at the balance sheet, they join the stampede. There’s already rumors going around about other banks, and even though I think SVB is a structural outlier, I would be moving money around if I were with them above the FDIC limit, even if I knew for a fact they were solvent.