" Had the depositors waited to withdraw their money, the bonds would have reached maturity and all depositors would be able to withdraw their full balance witho

" Had the depositors waited to withdraw their money, the bonds would have reached maturity and all depositors would be able to withdraw their full balance without any issue." If that was the case the Fed 'lender of last resort' function would have allowed that to happen - by taking over the SVB deposits that were just moving to another bank. In effect lending back JP Morgan, et al's increase in reserves. In reality the problem was that the income from the assets SVB had was insufficient to pay the Fed's penalty rate. Therefore SVB couldn't meet the Fed's cash letter - which is the stated reason for the bank's insolvency. Essentially SVB lent out money too cheaply by inexplicably swapping its floating rate reserves for fixed rate mortgage bonds that it overpaid for. SVB was relying upon keeping non-interest bearing deposits for the duration. Without those it was insolvent. Perhaps we need a new term: "insolvent at the Fed rate".