SVB had been around a long time, and you might correctly think that startups, which tend not to have things like "profits"—whatever those are—are not a terrific class of customers if you're a bank, and that's true, but not for the obvious reason that they usually disappear. Instead, the problem is that startups deposit and spend money on short timescales. SVB invested their deposits in long-term, fixed-rate assets, and then when everyone's board of directors ordered everyone to act like there was a recession, VC funding rounds dried up, and SVB's depositors started spending more of their deposits. SVB tried to get short-term liquidity to back up the deposits, depositors went to get their money out while they could, and we had a good old-fashioned bank run.
Don't be misled by venture capitalists talking about how smart they are, about "disruption" and "innovation": among themselves, they are a flock of sheep, clad in Patagonia vests.
Ultimately, since I have cleverly avoided having a job for the moment, this doesn't directly affect us. Neither SVB nor Signature were banks for human beings. I did call our finance guy about some strategy stuff, and right now we don't need to do much; but he spent the entire weekend fielding calls from his much more alarmed and high-maintenance clients. He's a friend, and has pretty well absorbed that we don't pay much attention to the stock market, because we want him to do it for us, but when things like this happen, I do call to check in.
We don't seem to be doing a 2008, which is good, as I was making my finance guy laugh thinking of the time interest rates went negative: which is to say, people were telling BNY Mellon, "I will give you $100, and I will let you keep $1 if you just guarantee I will get the other $99," which, like stagflation, is not one of those things anyone imagines to see in a lifetime.
Stay safe, healthy, and warm!
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