In 2018 govt rolled back post-GFC regs that could've helped prevent this. The bank bought too many long dated bonds that fell last year as rates rose. Perfect storm of mismatched assets vs deposits. It's not a credit issue like in 08 but public doesn't understand that and can create a run on banks regardless. Smaller regional banks (Truist et al) more potentially susceptible than giants like JPM. All depends how many long bonds they owned and how many people yank funds. Now that tides going out we'll see who else is swimming without trunks on...

It's interesting because you don't have garbage assets like in 08. You just have long bonds that are underwater for right now, but will mature at par at some point. So if an entity can hold them it's fine. But ifyou have depositors all wanting their money out at the same time, the bank's forced to sell at a loss to raise the $. Complete failure of management oversight of (fairly basic) bond duration risk, like financial management 101 stuff. There's nothing really exotic going on here. You can and probably should bailout deposits, but not SVB stock/bondholders, IMO. The question is what entity covers the "bailout" in exchange for taking those long bonds onto their balance sheet and holding them to maturity, because the entity would need to advance a dollar now but accept a $0.60 bond today that will one day be worth $1.00, kind of like an IOU. Interesting times. This is what happens when you artificially suppress interest rates for YEARS and throw $5T of stimulus onto a post-pandemic economy, then rapidly jack up the cost of money by raising rates: certain things are likely to break. 😉 My two cents.