If this had happened in 2008 I don't think the government would have reacted as quickly or as well. We would have seen a wave of bank failures. One of the less

If this had happened in 2008 I don't think the government would have reacted as quickly or as well. We would have seen a wave of bank failures. One of the lessons learned from 2008, especially after the collapse of Lehman, is that acting too late or sending mixed messages can make the problem worse. The SVB run started on a Thursday, and the government announced a plan to stabilize the banking system the next Sunday before the markets were about to open. It was a pretty fast reaction all things considered. What we didn't learn well enough from 2008 was the extent to which small bank failures can create systemic risk for the entire system. It's not like SVB was the only bank with long-term investments that lost market value after rates rose. When people realized that, they freaked out. The other thing people realized too late was that we have had a two-layer system of deposit insurance since 2008: the too-big-to-fail banks effectively have infinite insurance (because they can't fail) and smaller banks didn't. That creates an incentive for depositors to run on the small banks and move all their money to the ones that cannot fail. It seems like nobody understood that until a few weeks ago, including the regulators. Another problem, which is older than 2008 but needs to be fixed, is that our current system of deposit insurance doesn't make sense for the way businesses use banks. If it did, we wouldn't be in a situation where only 60% of deposits are insured nationwide. That blunts the effectiveness of deposit insurance for preventing bank runs. The solution may not be more insurance, but perhaps caps on account balances or limits to the percent of uninsured deposits at a given bank.