Wait a minute. Why would more (large) banks fail? I am guessing small banks and companies fail periodically. By any measure, SVB seems to be a one-off, gigantic risk management blunder. Why would there be an expectation of more of this to come?
If things start to go south, government employees and the military are still going to get their money.
The paychecks always come eventually...or else.
Basically, look at the stock market, any bank that is now hit with a >50% decline in share price like those 2 named above is because people noticed the problem.
The broader concern, with hindsight, is they had an extremely correlated/flighty deposit base compared to most banks, and that meant they should NOT have copied what other banks did. They needed to keep duration on the loan book much shorter and have much more liquidity/equity cushion.
SVB had ~40b in short term liquid assets. They had ~100b HTM securities. 210b in total assets. Nearly half of their assets were in HTM securities. You aren't going to find many banks with half their assets in HTM securities even banks holding a lot of HTM securities.
SVB had 170b in deposits which is a short term liability.
So they only had 40b in short term assets to cover 170b in short term liabilities.
That's the problem. The problem isn't HTM securities. The problem is diversification.
As a general approximation, all banks would fail if there were a run on them. It's merely a question of how much of a run would be needed. If the panic among VCs that led to the run on SVB were to continue in other parts of the financial system, other banks with shaky risk management could have similar challenges.
That being said, JP Morgan is not going to fail next week. Make no mistake that this was a massive risk management failure on the part of SVB. But large depositors of similar banks are panicking right now (just read HN this weekend), and it's up to banking regulators (FDIC, Federal Reserve, etc.) to calm their nerves by Monday morning.
There are so so many reasons that won't happen, but the statement is true and is useful to keep in mind when thinking about banks and the banking system.
It would also be mind blowing to me for someone whose job is to handle bank failures to not have a playbook for them. I know that FEMA has a truly impressive library of disaster playbooks in their analogous role.
I have huge respect for the FDIC. I feel they're the perfect example of a government agency that works.