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notfromhere

VCs started a bank run by telling all their portfolio companies to pull out

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That's just basic logic that anyone would follow to survive. VC's had nothing to do with SVB's bad money management.

They triggered the rush that exacerbate the downfall.

If nobody is rushing, SVB could probably find ways to sell something before it's too late.

I see it the other way around. The VCs started a panic. Name one other bank that could survive $42 billion in withdrawals in a single day. Other than Bank of Zimbabwe, obviously. Even Wells and JP Morgan would collapse under that strain. The VCs caused their own pain.

The panic was started by SVB, not VCs. Abstract this to any other bank and the reaction would have been the same.

No small or medium bank in the US can withstand a bank run

Yeah, but what are the specific cash amounts we are talking about?

Such extreme exposure to interest rate risk would've blown up in some other ways - say, a large client processing a routine payroll, executing stock buyback, or investing in an entity that banks elsewhere.

SVB had risks, VCs did what they should do to respond to said risk. Would you blame regular working class people in a retail bank run scenario for wanting to save their money from potential risk?

No. SVB price crashed 50% in one day and got downrated by Moodys, which exposed a bunch of red flags that would have resulted in a bank run regardless of what VCs said.

The stock crashed because of the initial pseudo bank run due to high interest rates on capital (at least that's the reason given for withdrawals), and the bank's subsequent failure to make up the difference after selling a treasuries portfolio. After which a real bank run occurred. Then the bank started down a path of a more desperate measure, and that's when they were shut down. At least that's what I got from an article.

VCs started a bank run because the bank they were using was insolvent.

That's not their fault. Would you keep your money in an insolvent bank?

I think they were solvent im the beginning of the week. But idk if it was just because they didn‘t have to mark their underwater investments to market

That’s a peculiar definition of “solvent”

It's the one banks and regulators use, though!

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