Lessons from Silicon Valley Bank
The Memo by Howard Marks
The Risks of Bank Liquidity
No bank can have enough liquidity to meet its needs if enough depositors ask for their money all at once. Banks operate with skinny returns on assets, but they make it up on volume. High leverage translates a low return on assets into a high return on equity. A modest decline in asset prices can wipe out a bank's equity and render it insolvent.
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