The withdrawals happened because the client base was sophisticated enough to realize (based on publicly available information), and interconnected enough to communicate to each other, that the bank was insolvent. But it's not the client base that caused the bank to be insolvent. That was entirely the fault of the bankers.

The bankers did a very poor job here, for sure ! But it was far from insovlent - it was insovlent if everybody decided to pull out their funds at once - which is what happened. Not a single bank could withstand that.

But so did the client base - we're not talking about small depositors here - if I read the documents correctly, Circle had >8B $ in SVB and they moved 5B $ before the week-end. It was a handful of wealthy individuals that organized this bank run.

> it was insovlent if everybody decided to pull out their funds at once

Which is the definition of insolvent.

A normal bank just goes to the Fed as the lender of last resort but, apparently, they won’t lend money to insolvent banks so here we are.

> Not a single bank could withstand that.

Wrong. Banks whose assets are worth more than liabilities can get unlimited low interest loans from the fed.

What's the direct relationship between these two. Are you saying if all of those deposits were kept in JPM the same would have happened? Why?

The size of JPM would've made it so a bunch of VC funds abruptly withdrawing all their money would look like a tiny drop in the bucket rather than a bank-destabilizing balance sheet issue.

JPM banks in the trillions; SVB, 200 billion.

Then a better questions is why would they suddenly decide to withdraw their money if the had deposited it at JPM?

It depends.

If Company A wants a bank account with x% interest and instant access to all their deposits at any time (which might be impossible to provide)

and Company B offers them such a bank account, wagering that they won't use that instant access at the same time as everyone else

who is at fault?

Does it matter ?

They are companies - they just go to court with that. They are or should be prepared to deal with this stuff.

What I'm saying is that this bank run has nothing to do with small depositors withdrawing their money here.