Equities are, instead, the sliver of hope between assets and liabilities - Russel Napier

DB may be insolvent, but to be fair, there aren't many banks that can pay out the figures recorded in the managed accounts. I recall one Utah bank which is supposedly able to, and there may be others, but usually a mainstream bank cannot fulfill 99% withdrawals of assets on short notice.

I don't think any bank can. But it's not a capital problem, it's a liquidity problem. A bank, whether an internationally active, or a mum and pop local bank, is in the business of taking short term deposits and lending the money long term. Banks are required to cover some of their deposits in liquid assets so that it can sustain some level of stress. But a full scale run on the bank where all depositors want their money back would kill any bank, big or small.

Besides being off-the-books and under-the-radar, how was Madoff's operation different than that? Genuinely curious.

A bank is solvent, Madoff wasn't. Madoff didn't have any asset, the cash you would have invested with him had been used to pay off other investors.

A bank has assets, the money you lent the bank (through your deposit) is invested in a mortgage, backed by a property. You will ultimately get your money back. but it is a timing issue (and therefore liquidity), not a solvency issue.

It's a liquidity issue if the bank invested in mortgages (usually), but it can be a solvency issue if they are invested in debt (sovereign or corporate) that can be defaulted on.

Totally different. A bank generates a return on it's deposits.

Madoff just paid a dividend or phony appreciation to investors based on money deposited by new investors -- except for the money he stole it was a closed system with no return generated.

He also concentrated his efforts on courting a relatively insular community (religious Jews) via trusted community figures to avoid awkward questions.

Thats usually a sign of a scam -- banks don't send your priest/rabbi/community leader to hawk CDs. But there are many hustles (Ponzi schemes, pyramid schemes, and various savings clubs) that are common in ethnic and religious communitiesand apread via word of mouth.