No normal bank is safe without government backing. Banks are inherently vulnerable to bank runs, because they work with money across different time intervals.

No normal bank is safe without government backing. Banks are inherently vulnerable to bank runs, because they work with money across different time intervals. For example, a hypothetical small town bank might turn checking and savings accounts into mortgages. If everyone decides to withdraw their savings all at once, the bank can't call all the mortgages due. So if everyone panics all at once, banks will fail. So we try to regulate the risks taken by banks, and we provide government-backed insurance. To be honest, the last-ditch "insurance" behind most banks is sovereign power. It has been a long time since companies have lost money in bank failures. Everyone has gotten complacent. The failure of SVB means that a great many people are suddenly seeing new risks. Come Monday, I expect to see lots of companies moving funds. And lots of banks hold government bonds that have fallen substantially in value because of the rapid changes in interest rates. I will be very happy if we get out of this with few bank failures.