> 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).
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).