Silicon Valley Bank. Signature Bank. First Republic Bank. Three high-profile bank failures in the last two months. What’s going on?
A bank fails when the value of its assets is less than the value of its liabilities, the obligations the bank owes to its depositors. Each of these three banks experienced a run on deposits: clients withdrew their deposits because they feared they wouldn’t be able to get their money out, creating a snowball effect that within 24 hours decimated the banks’ reserves.
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