> ...but all the banks that failed recently were doing normal banking (taking deposits and making loans).

I feel like the term "normal" here is a bit loaded.

To quote Buffett on First Republic Bank[1]:

>> If you take First Republic, for example, you could look at their 10-K and you could see that they were offering non-government-guaranteed mortgages in jumbo amounts at fixed rates, sometimes for 10 years, before they changed to floating. That's a crazy proposition.

Rubbing salt into the solvency wound, an overwhelming majority of First Republic's long-term assets were tax-exempt municipal bonds, and thus not eligible BTFP[2] collateral.

In the case of SVB, it was an extreme outlier with respect to sector concentration of uninsured depositors where all it took was a single individual with influence in a tight-knit community to trigger historically unprecidented outflows, which in turn forced massive losses in long-dated securities to be realized in an attempt to quench the liquidity demand impulse, which in turn broke the bank's solvency...nevermind that their outsized duration risk wasn't hedged, or that their Chief Risk Officer stepped down almost a year before the bank's demise without proper regulatory disclosure.

Then there's the matter of certain relaxations to the Dodd-Frank Act pushed during the Trump administration[3; see Title IV]...nevermind that Frank himself sat on the board of Signature Bank, or that SVB's CEO Becker sat on the board of the San Francisco Fed. I suspect it's not merely a coincidence that the assets of these failed banks skyrocketed shortly after deregulation yet remained under a certain $250 billion asset threshold "for strategic reasons".

[1] https://youtu.be/5QBkn42PSxk?t=488

[2] https://www.federalreserve.gov/financial-stability/bank-term...

[3] https://www.congress.gov/bill/115th-congress/senate-bill/215...