Why couldn't SVB borrow against the treasuries they had, and had to sell them instead, crystalizing the MtM loss? What was the limitation they faced?
That would at best be a coat of paint over a gaping crack in the wall. And as deposits are withdrawn in a run, they just get further and further upside down.
The original sin, from where I sit, is accounting for debt at book value, which apparently is what counts for reserve requirements for American banks. Everything else being equal, this doesn't have to be a big deal: yes, your profitability and maybe your competitiveness is impaired while your debt holdings are effectively earning you way less than market interest rates, but eventually the debt matures and you're back on your feet.
But if depositors run on the bank, suddenly you have to recognize your losses completely and immediately.
It was stupid of SVB to get so far out over their skis, but absent clever people on social media hyping their problems, they'd probably have weathered it.
If reserves had to be accounted for at something approaching market value, I would expect that SVB would have felt forced to address the problem earlier, when it was not such a big problem.