I partially agree with you... except "The fact that they sold assets for a loss indicates that they are not." is not true. Firms sell assets at losses all the time -- that doesn't mean they are not solvent. That means they had a loss, but their assets were still greatly in excess of their liabilities (as reported by the FDIC 211b vs 195b).

What they were not able to do was have enough cash on hand to deal with a bank run.

What you are saying reported by FDIC as 211B vs 195B was December 31st IIRC

And it appears that wasn't market to market

Since then they have had $40B in withdrawals causing them to sell all liquid assets at a loss and not being able to furnish withdrawals

The California regulator has explicitly stated they are insolvent: https://dfpi.ca.gov/2023/03/10/california-financial-regulato...

The assests they sold recovering as soon as intrest rates drop is as close to a sure thing as you get in finance.

The only reason to realise the loss is they needed the money now.

>as soon as intrest rates drop

Which could take a lot longer than people seem to expect. If you look at the past 100+ years of economic history, 2009-2021 is a complete anomaly. ZIRP is not the normal state of affairs, nor are negative real rates. There was an attempt at returning to normalcy from 2017-2019 but then Covid hit. Starting last year the Fed is attempting once again to return to a normal monetary environment. Rates are likely headed higher than people think and will remain there longer than people think.

I think what they meant to say is they were solvent, till the run.