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No, it was because they sold the bonds at a loss, triggering a loss of confidence and a bank run.
by di456 4y ago
No, it was because they sold the bonds at a loss, triggering a loss of confidence and a bank run.
- ambicapter 4y agoThey sold the bonds at a loss because they suddenly needed to make a whole bunch of depositors whole. It was a bank run. The loss of confidence came before the loss of liquidity.
- di456 4y agoThere was some tail wagging the dog. Depositors wanted to be made whole because the bank had to disclose bond sale, bond purchase, and stock sale activities as a package deal. Each activity individually might have snuck under the radar, but together that spooked the depositors. Then the CEO says there's not a problem which you only need to say if there is a problem. That didn't help either.