809.2. Duffie explains the similarities between a classic depositor run at a commercial bank and the failure mechanisms for dealer banks: "The relationships between a dealer bank and its derivatives counterparties, prime-brokerage clients, potential debt and equity investors, clearing bank, and other clients can change rapidly if the solvency of the dealer bank is threatened. The concepts at play are similar to those of a depositor run at a commercial bank. That is, fears over the solvency of the bank lead others to act so as to reduce their potential losses in the event of the bank’s default. Unlike insured depositors at a commercial bank, many of those with exposures to dealer banks have no default insurance, or do not wish to bear the frictional costs of involvement in the bank’s failure procedures even if they do have insurance. The key mechanisms that lead to the failure of a dealer bank are the flight of short-term creditors, the departures of prime-brokerage clients, various cash-draining actions by derivatives counterparties that are designed to lower their exposures to the dealer bank, and finally and most decisively, the loss of clearing-bank privileges."

In regard to these failure mechanisms, which of the following statements is TRUE?