[Alberta's Child]

I disagree with you on that one. The loans aren't the issue. The SVB collapse showed that the biggest problem is the bank's reserves. Many of these banks invested heavily in long-term U.S. Treasury bills and mortgage-backed securities over the years. With interest rates much higher today, those fixed-income securities have lost a lot of value.

[PAR35]

Bad commercial real estate loans (and in some locales, the popping of the residential real estate bubbles) will drag down some banks. Those were what caused the 2008 crisis. Writing down the loans to the value of the collateral is what hits the reserves.

[Jonty30]

If banks have 100% of the money secured, nobody should have trouble getting their money back even if every one of goes to the bank at the same time.

Now, if 99% of the money is secured and we all went to bank at the same time, 1% will not get their money. The banks rely on the idea that there will not be a bank run by everybody and they’ve figured the ideal ratio that they can have between keeping money in the bank and how much of that money they can loan out.

It works pretty much most of the time. Except when the bank gets greedy and goes out of ratio of what they can keep on hand and what they can loan out. I’m not saying that this would be the only reason why a bank cannot pay out a customer’s money from their account, but it is a big one. Bank executives put too much weight on profit and not enough on being an on-going concern.