In discussing the failure of Silicon Valley Bank (SVB) in March 2023, Fed Chair Jerome Powell remarked that “a number of standard assumptions, even though they were informed by hard experience, were wrong. Notably, bank runs were no longer a matter of days or weeks—they could now be nearly instantaneous.”

a. Why can bank runs happen more quickly now than they could years ago?

b. How did the Fed and other bank regulators respond to the failure of SVB?

c. Why were some economists and policymakers concerned about the consequences of the regulators’

response to the failure of SVB and Signature Bank?