Actually not. The kind of asset they invested in does not really matter. If they invested in super safe government bonds at <1% at the same time, they would have had the exact same issue. It is the rapidly rising interest rates that did them in. If they were smarter they could have done a rolling ladder of short maturities but probably someone there was lazy.

They could have stopped offering the very high savings yields that attracted that capital, but profits and exec comp would have dipped. So...this instead.

Gotta love the monday morning quarterbacking. "Get rid of the thing that attracts all your customers, surely then there will never be a bank run."

I suppose you’re right, there’s nothing they could have done differently. They were forced to offer just about the highest, unsustainable, yield rates and otherwise attract and hold unmanageable amounts of capital. No other choice! Inflation was unforeseeable. Despite 40 years of startup banking experience and $3-10M yearly exec comps, how could they be expected to consider high inflation and a tech downturn happening at the same time? We are asking just too much of those poor execs, risk management must have been someone else’s responsibility. Biden must be to blame.

That would have resulted in just as much of a flight, to higher yield instead of safety.

No it wouldn't have. The company would still be solvent and have a large number of total deposits, just less in total than they could've had otherwise. What they did literally destroyed the entire company; not doing so would not have had that result. The outcomes are not comparable.

What? Anybody with financial sense has noticed that rates have skyrocketed, and if you're still earning less than 1%, you're throwing money away. The more money you have, the bigger a deal that is.

Bank accounts are very sticky and most people don't move them in search of better rates. In particular, people are not thinking of cash sitting in a checking account as anything other than short term cash they don't expect to earn a return on anyway, so you wouldn't change your entire commercial bank (that everyone else in your industry also uses and expects) just to chase some small returns.

SVB was holding so many uninsured deposits because they were the operating cash for businesses. If you have $100M, the difference in interest would be $3M a year between 1% and 4%. What kind of business wouldn't be paying attention to that?

Banks were not offering any interest on deposits at this time. Maybe you could find .2% if you looked hard

The execs have been pulling $3-10M/yr compensation and will walk away wealthy, legally in the clear, and probably into similar roles and comp elsewhere (or simply retired). They aren't bumbling idiots, though if they were, they'd be hella crafty ones.

I don't think the depositors, investors, or VC's that pushed for SVB were idiots. SVB was a good bank, with a good reputation, and good services that got mismanaged into oblivion.