Good morning. Welcome, Nexios today. It's Monday, March 13th. I'm Naila Boudou. Here's

what we're watching today. China gets a major diplomatic win. Plus, atmospheric rivers

are bringing more rain, snow, and flooding to California. But first, US banking regulators

try to avert a financial panic. That's today's one big thing.

It's been a minute since we've heard the phrase bank collapse or the idea that the government

has to bail out a bank. But after a weekend of speculation and anxiety following the

collapse of Silicon Valley bank on Friday, last night, federal banking regulators, including

the Treasury, the Federal Reserve, and the Federal Deposit Insurance Corporation, determined

that FDIC insurance funds will be used to protect SVB depositors from losing their money.

Hexios' chief economic correspondent, Neil Irwin, and our chief financial correspondent,

Felix Salmon, are here to explain how SVB collapsed and what this means for our entire

financial system. Hello, gentlemen. Hi, Naila. Hi, Naila. So, Felix, how could a major

bank that worked with thousands of venture capital firms collapse within a couple of days?

It was a big failure of risk management. What they did was they took a whole bunch of deposits,

tens of billions of dollars of deposits, and invested them in mortgage bonds. And then

those mortgage bonds went down so far in value that it looked very much as though the value

of the mortgage bonds was lower than the value of the deposits. That their assets were

worth less than their liabilities, which means that they were insolvent. And when people

are banking with a bank that looks like it might be insolvent, they'd take their money out of

that bank. And so what we saw on Thursday was by far the largest bank run that we have ever

seen in the history of this country, 42 billion dollars in one day. And the biggest bank run ever

in American history up until Thursday was Washington Mutual in 2008. And that was 16 billion

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