Mark offers a balanced view:<p>"My sense is that the significance of the failure of SVB (and Signature Bank) is less that it portends additional bank failures and more that it may amplify preexisting wariness among investors and lenders, leading to further credit tightening and additional pain across a range of industries and sectors. Four interrelated factors that caused SVB to fail:<p>1. If the bank had made more loans relative to the size of its deposit base, it wouldn’t have bought as many potentially volatile bonds.<p>2. If the bonds the bank bought hadn’t had such long maturities, it wouldn’t have been as exposed to price declines. When looking at SVB’s demise, the decision-making behind its bond purchases stands out as particularly flawed and probably the primary cause of the bank’s failure. According to public reports, SVB management “made a bet” that interest rates would hold steady or fall. While that expectation is implicit in its actions, I find it hard to believe it was a conscious, considered decision, as opposed to an example of mindlessly chasing yield, perhaps abetted by wishful thinking.<p>3. If the Fed hadn’t raised interest rates as much as it did, the bonds wouldn’t have lost so much value.<p>4. If the depositors hadn’t exited en masse, the bank wouldn’t have had to sell bonds and realize the losses.<p>About twenty years ago, my partner Sheldon Stone shared an interesting parable: Imagine you’re on a boat crossing Lake Erie. The captain comes on the loudspeaker and says, “Everyone run to the left side of the boat.” A minute later he says, “Everyone run to the right side.” And a minute after that he says, “Run back to the left.” It would make for an unusually rocky crossing. Today the Internet and social media are the loudspeaker, which almost anyone can take over, disseminating any message they choose. This “digital herding,” as Gillian Tett of The Financial Times has labeled it, can have a huge impact in many fields, particularly those that run on information and trust."