Real-time panic is behind bank runs

But there's also the fact that venture capitalists are not your ordinary clients and that a simple group chat run amok unnecessarily caused the SVB mayhem



March 15, 2023 - 2:36 PM

Jimmy Stewart portrayed George Bailey in the 1946 classic “It’s a Wonderful Life,” in which the small town banker prevented a run on its holdings. WIKIMEDIA

George Bailey knew how to fend off a bank run. When the citizens of Bedford Falls ran to the bank to demand a return of their deposits, they encountered George, in the form of Jimmy Stewart, guarding the vault with a moral lesson.

“The money’s not there,” he explained, as banker turned preacher, pleading that one family’s savings had been invested in another family’s home. To panic, he argued, would hurt the entire community.

George at least had time to run to the bank and summon his thoughts. Contrast that with what happened at the Silicon Valley Bank in California late last week.

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