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That should only be a concern for investors, not depositors. The HTM lockup is only a concern for depositors if they all start trying to withdraw at once...whic

That should only be a concern for investors, not depositors. The HTM lockup is only a concern for depositors if they all start trying to withdraw at once...which is exactly what happened due to the VC-fueled panic.

vkou 4y ago
The depositors were all trying to withdraw all at once, because the depositors were startups that are spending money, but aren't getting any new funding injections or revenue. That normal behavior triggered the insolvency.
- KaiserPro 4y ago
  > That normal behavior triggered the insolvency. Its not normal to have 42 billion withdraw in a day, net. That's 20% of total assets. If your hypothesis is correct, then all of the companies using SVB would have spend all their money in just over a business week.
  - vkou 4y ago
    They were insolvent before that 42 billion was withdrawn. The bank run only started after they announced their insolvency. SVB sold all of its liquid securities to finance regular customer withdrawals, and came up short. It announced that it's going to be borrowing money, selling more shares, and that it's going to mark down it's long-term assets. The bank run started after that announcement.
    - KaiserPro 4y ago
      If they were insolvent before the 42 billion was withdrawn, how did the people withdraw the 42 billion?
      - vkou 4y ago
        Insolvency means that they owed 220 billion, while owning 200 billion worth of assets. SVB had enough cash-on-hand, and could borrow money against their assets in order to serve 42 billion dollars worth of withdrawals. Their balance sheet still had a huge hole, from the moment that they marked-to-market their long-term treasuries. Which was before those 42 billion dollars were withdrawn.
        KaiserPro 4y ago
        I'm being very specific here, they had ~175b in deposits. There assets may or may not have been more or less than deposits, that is immaterial. They were insolvent because they did not have enough cash/credit/liquid capital to cover the predicted withdrawals. That is the why they are insolvent. Long term, yes, the asset state would have been a problem, and would(should) have been marked up as a ~25% loss on the bonds that were being hammered by inflation. but at no point would that have been a big issue for the stability of the bank. It would have hammered their share price, but not deposits. It probably would have required a change of management, but again, not fatal. The issue here is that "asset insolvent" is rarely described like that, it normally at the point where you declare bankruptcy because no-one will buy you out because you liabilities are way more than your income.
      - deleted 4y ago
        [deleted]

vkou 4y ago

The depositors were all trying to withdraw all at once, because the depositors were startups that are spending money, but aren't getting any new funding injections or revenue. That normal behavior triggered the insolvency.

KaiserPro 4y ago
> That normal behavior triggered the insolvency. Its not normal to have 42 billion withdraw in a day, net. That's 20% of total assets. If your hypothesis is correct, then all of the companies using SVB would have spend all their money in just over a business week.
- vkou 4y ago
  They were insolvent before that 42 billion was withdrawn. The bank run only started after they announced their insolvency. SVB sold all of its liquid securities to finance regular customer withdrawals, and came up short. It announced that it's going to be borrowing money, selling more shares, and that it's going to mark down it's long-term assets. The bank run started after that announcement.
  - KaiserPro 4y ago
    If they were insolvent before the 42 billion was withdrawn, how did the people withdraw the 42 billion?
    - vkou 4y ago
      Insolvency means that they owed 220 billion, while owning 200 billion worth of assets. SVB had enough cash-on-hand, and could borrow money against their assets in order to serve 42 billion dollars worth of withdrawals. Their balance sheet still had a huge hole, from the moment that they marked-to-market their long-term treasuries. Which was before those 42 billion dollars were withdrawn.
      - KaiserPro 4y ago
        I'm being very specific here, they had ~175b in deposits. There assets may or may not have been more or less than deposits, that is immaterial. They were insolvent because they did not have enough cash/credit/liquid capital to cover the predicted withdrawals. That is the why they are insolvent. Long term, yes, the asset state would have been a problem, and would(should) have been marked up as a ~25% loss on the bonds that were being hammered by inflation. but at no point would that have been a big issue for the stability of the bank. It would have hammered their share price, but not deposits. It probably would have required a change of management, but again, not fatal. The issue here is that "asset insolvent" is rarely described like that, it normally at the point where you declare bankruptcy because no-one will buy you out because you liabilities are way more than your income.
    - deleted 4y ago
      [deleted]