By the time it gets out that a bank is too illiquid to cover its deposits, the situation is already too unstable for any kind of careful coordination of thousan

By the time it gets out that a bank is too illiquid to cover its deposits, the situation is already too unstable for any kind of careful coordination of thousands of parties with real concerns about their valuable resources. Imagine the results of an email sent to everyone in Silicon Valley: — “So the local bank screwed up and can’t cover all its deposits. But let’s get together to see if we can all agree to wait this out as a disciplined block of customers. How is Thursday for everyone? (It’s very important that we all cooperate. So if I don’t hear from any of you in the next 20 minutes, I reserve my own right to start withdrawals.)” — That’s not going to work! The bank will be toast before half the recipients get their email. This has absolutely nothing to do with an “investor class”. And everything to do with bad bank risk management and timely contingency planning.