[celticninja]

This is a pure panic run on the bank though, irrational and counter-productive. The bank was not insolvent and could have been fine if everyone didn't withdraw all at once. The issue I have is that this was started by a group of VCs who told their startups to withdraw, that caused others to withdraw and the slowest are the losers. But they didn't have to be. It's a shame that the VCs that caused this will think they were forward thinking enough that they prevented a problem, when they actually caused it. It seems like the best thing SVB could have done was not sell their assets at a loss to make cash available, if everything went into the receivers then eventually everyone would have been made while. Right now there is at a minimum a $2.1bn loss that all remaining depositors will have to eat.

[jacquesm]

Prisoners dilemma. Do you wait until it is too late or do you cash out early to avoid being caught in a bank run, thereby making the bank run more of a reality?

There is no penalty for cashing out early and being wrong about the bank run but there is a huge penalty otherwise.

[PheonixPharts]

It wasn't pure panic. The withdrawals started because it was announced that SVB was liquidating some of its assets at a loss despite SVB having recently announced that they had no need for such actions and were perfectly fine liquidity wise.

Your bank is supposed to be zero risk, so it's is not irrational when your bank even hints at liquidity issues that you get out.

[rdubz]

> This is a pure panic run on the bank though, irrational and counter-productive. The bank was not insolvent and could have been fine if everyone didn't withdraw all at once.

This is incorrect. SVB converted deposits to risky paper that lost value. They were insolvent.

The fact that the risky paper would return its promised 1%/yr, if everyone just waited 10 years, is a canard. SVB's depositors could get 4% elsewhere, today. Asking them to sit tight at 1% is the same haircut as liquidating that paper at a loss today (which is what happened).