3 ms·
From what I have seen, they were not insolvent before the bank run. They were in trouble from a bad bet on interest rates, but were attempting to restructure th
by mcguire 4y ago
From what I have seen, they were not insolvent before the bank run. They were in trouble from a bad bet on interest rates, but were attempting to restructure their holdings to get liquidity.
Bank runs are a psychological construct, not an economic one. They are based on rumors, not facts. Deposit insurance is intended (and usually successful) to prevent runs by ensuring that depositors will be made whole even if the institution does become insolvent, because a run will destroy any banking institution.
The failure of SVB was caused by those who rushed to get their money out based on fear.
- notbuyingit 4y agoI find it really amusing that everyone seems to just find it normal, okay, chill, that our banking infra is based on semi-blind confidence and people not expressing concerns or warnings, or you know taking their own money out of the bank. Hour by hour I am in horror at the standard of "normal" that people will defend because they can't see it for what it is or imagine an alternative. Capital capital jobs jobs! Hoorah! This is the way.