4 ms·

all banks are under capitalized. no bank could stand that kind of bank run

• fancyfredbot 4y ago
  There's a difference between being able to withstand a bank run and being fully capitalised. To be fully capitalised the value of your assets needs to be greater than the value of your liabilities. You are allowed to value your assets at fair prices when you work this out. SVB did not have enough money by this measure and that is very very unusual for a bank. Despite this, you are right that even well capitalised banks cannot survive a bank. To survive a run you need to find a buyer for all of your assets right away, and you quickly run out of buyers, forcing the price down.
  • angryasian 4y ago
    again its debateable. VC's caused all their portfolio teams to pull their money. Had they all relaxed and just waited SVB to raise... is there even an issue ?
    • fancyfredbot 4y ago
      It's the prisoners dillema. Game theorists would expect them to act the way they did even though it's better for everyone if they just relax.