[Dilbert San Diego]

So is this bank failure caused by a run on the bank by depositors withdrawing so much cash? And not because the bank was badly managed, and/ or , had bad loans on the books?

[Alberta's Child]

It was badly managed because they had most of their reserves in long-term bonds that pay very low interest rates. When the customers all came to withdraw their funds, the bank was forced to sell those bonds just to raise cash to pay out to their customers who were withdrawing money.

Because interest rates are much higher today than they were when the bank bought the bonds, they had to sell the low-yield bonds at a steep discount.