SVB Hall of Shame
Call me naïve, but if I put money in a bank I should be able to get it back whenever I want. If I didn&#x27;t want it to be liquid, I&#x27;d buy something less liquid. The very concept of a bank run is ridiculous. If all a bank&#x27;s customers want their cash back, they should be able to get it back without affecting the liquidity of the bank.<p>Transaction accounts don&#x27;t earn me anything and have fees of their own. There&#x27;s little incentive to stay at one bank over another. If they want equity, they should sell long-term secured loans with LVRs under 100% or lock in my cash with term deposits or any number of other less liquid asset classes. But why should I feel guilt over moving my cash from one bank to another?<p>Maybe it&#x27;s because I&#x27;m Australian but I feel our banking industry is significantly more stable. The last time a bank had any serious issue was 1990 and it was a (single bank that itself was bailed out by the government). Australian banks make their money through mortgages (averaging less than 80% LVR or insurance-backed if higher and with fixed terms of generally no longer than 5 years), credit cards and management fees on long-term investment products -- they don&#x27;t rely on investing cash deposits on long-term illiquid instruments.<p>The fact this doesn&#x27;t seem to be the case should raise questions over the entire US banking industry. Cash should be liquid.<p>Edit: For reference, APRA (bank regulator in Australia) has some very strict liquidity risk management requirements and most banks own liquidity requirements are significantly higher than this: <a href="https:&#x2F;&#x2F;www.apra.gov.au&#x2F;apra-explains-liquidity-banking" rel="nofollow">https:&#x2F;&#x2F;www.apra.gov.au&#x2F;apra-explains-liquidity-banking</a> -- an Australian bank would never be allowed to purchase a 10-30 year bond to match against cash assets.