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How the Psychology of Silicon Valley Contributed to a Bank Collapse

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In just a few years, news specials and academic papers will mark 100 years since the start of the Great Depression. Archival photographs will be dusted off to display the restive crowds gathering outside bank doors in desperate attempts to collect their life savings.

A kind of dress rehearsal for the coming commemorations took place in recent days as the financially besieged Silicon Valley Bank (SVB) collapsed. Following tradition, people did appear at the bank’s doors. But the inventiveness of Silicon Valley in the decades since that earlier economic shock have offered alternate pathways for depositors to show up en masse for a bank run. Every available electronic channel—Slack, Twitter, online banking—was brought to bear, all without the necessity of showing up at 3003 Tasman Drive in Santa Clara, Calif., the bank’s main office. Private Slack channels filled with frenzied messages from those pulling out their money. Depositors could sit at home and obsessively refresh their browsers for hours on end to try to complete an online transfer of their cash to another…

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