Michael Hiltzik blames SVB failure on "skittish depositors" and "paper losses" in bond portfolios

SVB's fundamental problem was that it had a huge number of skittish depositors, most of whose money was uninsured by the FDIC and could be withdrawn on demand, and had invested those deposits in treasuries and bonds that were generally safe, but wouldn't mature in less than 10 years.  After a series of interest rate hikes, the bonds were showing immense losses on paper.  When the depositors pulled their money — to the tune of $42 billion on March 9 — the bank couldn't liquidate its bond portfolio in a way that wouldn't convert its paper losses to real losses, so it ran out of money to pay the depositors.

~ Michael Hiltzik, "How Trump's frenzy of deregulation killed Silicon Valley Bank," Los Angeles Times, March 30, 2023