Silicon Valley Bank's Customers Withdrew $42 Billion in a Single Day

Silicon Valley Bank, known for its tech-savvy customers, experienced a massive bank run after one person started withdrawing money. The close-knit community quickly followed suit, fearing a potential cash shortage. This may be the first bank run initiated through a group text, highlighting how technology has changed the game. In just one day, $42 billion was withdrawn, spelling trouble even for a healthy bank. The lesson? Bank runs can only be prevented by addressing the panic beforehand. Deposit insurance was created during the Great Depression to reassure customers that their money is safe. However, Silicon Valley Bank's customers had uninsured deposits exceeding $250,000, leading to further panic. With so much at stake, it became rational for everyone to withdrawal. Ultimately, the incident highlights the vulnerability even in a high-tech environment.