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There is contagion: loss of confidence in banks. This is why FDIC exists in the first place.

• jonhohle 4y ago
  I lose confidence in banks when their failure results in special treatment that no one else has access to, perpetuating the behavior that caused the failure.
  • worrycue 4y ago
    Your sort of loss in confidence don't lead to further bank runs and complete collapse of the financial system so I think it's a loss they are willing to suffer. > perpetuating the behavior that caused the failure. A detail post-mortem is going to be needed to be done to see what cause this whole mess. So far it seems their mistake is buying "risk free" bonds when they shouldn't have - but then again who could have expected interest rates to rise so quickly - and not having a diverse enough depositor base - SVB served mainly tech and Silvergate is heavily exposed to crypto; both sectors took hits recently resulting in people redrawing lots of money for a variety of reasons and it ultimately caused a run. That's what I figured out watching various YouTube videos anyway.
    • LunaSea 4y ago
      > So far it seems their mistake is buying "risk free" bonds when they shouldn't have - but then again who could have expected interest rates to rise so quickly Over a period of 10 years which is the duration of the bonds they bought, I would say that the chances are pretty fair.
      • worrycue 4y ago
        I figured if the interest rate went up slower they could have survived the lower losses.