> GPT-4 identifies SVB’s biggest risk & gives good advice using 2021 balance sheet
From the article GPT-4 gave the likelihood of a bank run as a 1 out of 5. Yes, SVB, made some bad bets, but even with those bad bets they could have continued operating just fine. The thing that actually killed SVB was the $42 billion being withdrawn in a single day out of the $190B in total deposits.
The bad bets were the catalyst that triggered the bank run, but they were not the root cause. The root cause was SVB caters to a specific market segment, venture backed startups, that exhibit herd like behavior. All it takes is a few VCs telling their portfolio companies to move their money out of SVB and suddenly 22% of all deposits are withdrawn. I suspect few banks could survive a similar bank run. None of this is mentioned by GPT-4.