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https://en.wikipedia.org/wiki/Collapse_of_Silicon_Valley_Bank https://en.wikipedia.org/wiki/Collapse_of_Silicon_Valley_Ban... In which the FDIC took unpreceden

https://en.wikipedia.org/wiki/Collapse_of_Silicon_Valley_Bank https://en.wikipedia.org/wiki/Collapse_of_Silicon_Valley_Ban... In which the FDIC took unprecedented action, drawing down the DIF to backstop depositors beyond the insured $250k and offering a credit facility to other banks, in order to prevent "contagion" - a panic, a bank run - which was presumed to be likely after the 3rd largest bank collapse in US history. A bank almost no one outside of California had heard of before it died. Bank runs are serious business, and far from being something "no one cares" about, even just talking about them makes banks nervous, because they can happen to even "healthy" banks. The big banks have been undercapitalized for more than a decade, and even a moderate run on a regional institution threatens the entire system. Which is why it should be done, or at least signaled as incoming; it's good leverage. >You're free to take a vacation or quit working if you want to. Go ahead. The implicit, "I'll stay here, where I'm nice and secure," is delusion. People care about your outcomes even if you don't care about ours. Take the invitation to organize with others to secure your own future, to show just how much you're needed before your employer decides that you're not (however erroneously).

nradov 6mo ago
You really missed the point. SVB was undone by their own failure to manage interest rate risk, and then by the actions of corporate depositors. Retail banking customers had little to do with it. Corporations certainly aren't going to participate in some sort of pointless consumer protest.
- underlipton 6mo ago
  It's a liquidity problem. Retail absolutely can drop any given bank into a liquidity crunch by pulling out too many funds, too quickly. It doesn't even need to put a given bank at risk of insolvency, if the situation is read as widespread and/or growing, because as the event expands, so does the likelihood that someone else is mismanaging their books. Someone who is hooked into another institution, and another, and another. Contagion. Anyway, corporate depositors have a duty to safeguard their capital. That means that if a bank run is underway by retail depositors, they're in line too, willing participants or not. This is why, again, even discussion of bank runs is discouraged, and their likelihood and effectiveness downplayed. They're built on turning the imperative of self-interest, which the financial industry is built on, on its head.
  - nradov 6mo ago
    Nope, you're still missing the point. SVB had a solvency problem, not just a liquidity problem. And some silly consumer protest withdrawals will never be able to cause a liquidity problem for any bank that matters.
    - underlipton 6mo ago
      Their liquidity problem WAS their solvency problem. The bank run is what did them in. Hence, this entire conversation Read the previous comment again and at least attempt to understand it, please. (I don't expect you to, because you're approaching this conversation as someone who seems to know that I'm right, but who is obliged to deny with trivializing language like "silly", but I do have to at least ask. Anyone reading it will hopefully understand that your patronizing tone is masking anxiety.)

nradov 6mo ago

You really missed the point. SVB was undone by their own failure to manage interest rate risk, and then by the actions of corporate depositors. Retail banking customers had little to do with it. Corporations certainly aren't going to participate in some sort of pointless consumer protest.

underlipton 6mo ago
It's a liquidity problem. Retail absolutely can drop any given bank into a liquidity crunch by pulling out too many funds, too quickly. It doesn't even need to put a given bank at risk of insolvency, if the situation is read as widespread and/or growing, because as the event expands, so does the likelihood that someone else is mismanaging their books. Someone who is hooked into another institution, and another, and another. Contagion. Anyway, corporate depositors have a duty to safeguard their capital. That means that if a bank run is underway by retail depositors, they're in line too, willing participants or not. This is why, again, even discussion of bank runs is discouraged, and their likelihood and effectiveness downplayed. They're built on turning the imperative of self-interest, which the financial industry is built on, on its head.
- nradov 6mo ago
  Nope, you're still missing the point. SVB had a solvency problem, not just a liquidity problem. And some silly consumer protest withdrawals will never be able to cause a liquidity problem for any bank that matters.
  - underlipton 6mo ago
    Their liquidity problem WAS their solvency problem. The bank run is what did them in. Hence, this entire conversation Read the previous comment again and at least attempt to understand it, please. (I don't expect you to, because you're approaching this conversation as someone who seems to know that I'm right, but who is obliged to deny with trivializing language like "silly", but I do have to at least ask. Anyone reading it will hopefully understand that your patronizing tone is masking anxiety.)