I don't think it's a big change. I think very few people are qualified to do due diligence on their banks. It's a bit like expecting people to inspect bridges before they drive over them. It's a piece of financial infrastructure that we expect to just work. It would be a big change to not have that expectation, and would likely result in the collapse of the regional banking system as people flock to the Big Four "systemically important banks" which have stricter regulatory requirements and the implicit backing of the federal government. We are seeing a lot of that flocking despite the actions of treasury on Sunday.
Moody's gave SVB an A rating until they were already collapsing. The State of California said SVB was financially sound until March 8.
And the problem is, even if it were possible to know the health of a bank as a depositor, a sound bank that people come to believe may be unsound collapses in a bank run the instant that the realization occurs, so you would lose your money anyway even though the bank was sound when you first deposited unless you got in early on the run.
This is a big part of the problem in tech apparently. It _is_ a big change and in other industries it is very common for large cash holders to do normal due diligence on their banks and to have technology and procedures to mitigate the counterparty risk.
The flocking concern was literally cited as one of the problems with “too big to fail” in 2008 and it happened! Lots of corporate & governmental treasurers took that as a clue to move to larger banks.
Bank runs start because someone notices and publishes that a bank is insolvent, not the other way around. In this case it was because a bunch of supposedly sophisticated actors realized it too late.
I think the fact that a bank called "Silicon Valley Bank" collapsed is really breaking a lot of people's brains. The big tech companies (and other big companies) have treasury departments that manage short and long term cash. The companies that are impacted by the current banking instability are largely small (and some medium) businesses that generally only manage cash reserves for short term expenses. The tech companies that were impacted are largely startups that are depositing their runway which they generally quickly burn through. Many of these startups are small enough to not even have a CFO, let alone a treasury.
But it's not a tech startup-specific problem - it's a small business problem. Signature Bank (collapsed) and First Republic Bank (barely hanging on) largely handle bread and butter small business accounts. These are companies that just need a place to store cash that they use for payroll and recurring business expenses. Many of SVB's customers were also non-tech small businesses.
One SVB customer interviewed here in Boston was an electrical contractor. I'm not sure that it's wise to expect electrical contractors to have CFOs and treasury departments to "mitigate counterparty risk" with their banks if you want to have functioning small businesses in your community.
Not sure of the relevance of the last line of your comment, but it's wrong. A bank run can either be the cause or the effect of bank insolvency. My point was that there's no real orderly way of noticing that a previously healthy bank is now unhealthy and transferring out your money. As soon as the bank is believed to be unhealthy you get a run and near-instantaneous collapse, as we have been seeing. Notice that I used the words "healthy" and "sound" and not "solvent." Any bank will become insolvent in a bank run.
Moody's gave SVB an A rating until they were already collapsing. The State of California said SVB was financially sound until March 8.
And the problem is, even if it were possible to know the health of a bank as a depositor, a sound bank that people come to believe may be unsound collapses in a bank run the instant that the realization occurs, so you would lose your money anyway even though the bank was sound when you first deposited unless you got in early on the run.