It's somewhat confusing to me, because a $100 treasury note is only worth less than $100 if you try to sell it today. You still will get your $100 back if it matures.

This is the crux of the problem. SVB may have intended to hold to maturity, but the market forced it to sell to raise cash.

You may hold 100K in treasuries today, but if your employer can't make payroll, you're gonna sell to pay rent.

Aside from all those tech founders (today's LP VCs) from 2008-2020 likely held equity/deposits at SVB, and the sheer call out by them to make a run on the bank yesterday just broke the bank. The speed of fintech makes it feel coordinated.

Funny it seems like VC GPs were on the horn yesterday to withdraw, and I know a number of LPs telling me last Sun/Mon they'll be "out of the country" next month. Looks like some folks had early info.

> but the market forced it to sell to raise cash.

Can you clarify this part?

I'm not super familiar with the intricacies of banking, so my guess is that this is simply due to part of it I don't know about, but...given all the "creative financial instruments" I've heard about since the runup to the 2008 crash, I have to wonder if this "market force" was at least partly due to something SVB was doing that wasn't terribly wise.

> was at least partly due to something SVB was doing that wasn't terribly wise.\\\

A startup-focused bank probably shouldn't have been investing into 10Y, 20Y, or 30Y US Treasuries, when their customers might only have 2 or 3 years worth of life in them.

So yeah, there's a bit of stupidity here for sure. But its the kind of stupid that I can imagine a lot of banks making.

@danaris - if you are a bank and people want to withdraw money, you need cash to pay them. By "the market" we mean the banks depositors who withdrew their case (partially due to these very concerns, hence why bank runs are called bank runs)

Right, but Alice and all of her friends want their money back now, and it’s your job as a solvent bank to give them their money when they ask for it.

$100 today and $100 in a year are not the same thing.

If I deposit $100 into a demand account, I expect to get $100 when I demand it.

If you want to sell me $100 in the future for less today, that's something worth considering, but that wasn't the deal depositors had.

Yes but many people want their money today, not in 10 years.

That's a bank run tho not "normal operating" status.

Bank runs happens when you create conditions that can't handle bank runs. Nobody would worry about keeping assets at a Bank that wouldn't get destroyed if people started asking for their money.

Therefore although bank runs aren't normal, they will almost surely happen to you if you put yourself in a situation where a bank run would destroy you. So you have to work as if bank runs are normal, or they will be normal.

Damn near the entire customer base of Silicon Valley Bank withdrew their money yesterday (Thursday), forcing SIVB to sell those 10-year notes.