This is an unrealistic rationalisation after the fact.
If you have lost confidence in your bank you will not sit tight and see what happens, you will withdraw your money to protect yourself.
The article also contains quite a gem:
"Every VC I know was telling people, ‘We think your deposits are safe with SVB. It would be prudent to take some money because you could have a liquidity crisis for a week, but we don’t think a run on the bank makes sense.’"
That's a very strange thing to say. If it is prudent to take some money out then deposits are not safe and you should get everything out ASAP. Those who saw it coming did exactly that.
It doesn't matter if you have confidence in your bank. You just need confidence in the FDIC. They have a history of recovering everything including uninsured assets.
> This is an unrealistic rationalisation after the fact.
It's clearly correct that they were worried about nothing because 1. nothing bad happened to anyone who didn't withdraw funds 2. by withdrawing funds they now don't have a bank anymore. Which is a problem if it was the only one willing to handle startups.
The FDIC insures up to $250k only. You are not asking for confidence but for faith that somehow they'd be willing to guarantee 100% out of their good hearts. That's an irrational thing to do when your money is at risk.
Regarding your second paragraph: hindsight is such a wonderful thing! Also strange to claim that they don't have a bank anymore...
No, they directly insure $250k and repeatedly and consistently demonstrate their ability to recover everything else by repossessing failing banks and selling them to other parties. They don't promise it's all immediately available past $250k, so it may take some time, but for you to expect a haircut you would need an example of someone getting one.
I would prefer this be more explicit policy though.
> That's an irrational thing to do when your money is at risk.
If you know what a bank run is you know this is causing it, so this is bad game theory (as we see since it caused the bank to fail). You should actually pursue a strategy of stopping everyone else from withdrawing. Screaming at all your founders and panicking in group chats is not that.
> Also strange to claim that they don't have a bank anymore...
They ain't got one. SVB no longer exists. If you want a new checking account for a new business you cannot get one from DINB of Santa Clara.
If you have lost confidence in your bank you will not sit tight and see what happens, you will withdraw your money to protect yourself.
The article also contains quite a gem:
"Every VC I know was telling people, ‘We think your deposits are safe with SVB. It would be prudent to take some money because you could have a liquidity crisis for a week, but we don’t think a run on the bank makes sense.’"
That's a very strange thing to say. If it is prudent to take some money out then deposits are not safe and you should get everything out ASAP. Those who saw it coming did exactly that.