So is this the same as me going to a bank, giving them $500 to open a savings account which will accrue interest and will also allow me to withdraw some or all of my $500 whenever I want, then at some point the bank says "yeah that $500, you can't withdraw that whenever like we said, but you'll still get interest on it"?
No because that doesn't have a common mistake and your bank deposit is insured. Also, you have a reasonable expectation that your bank will make only sound loans and no reason to think your bank's business model isn't sound. So it's totally different. (It would be different if, for example, you knew the bank was going to take all the money it borrowed to Vegas.)
However, prior to deposit insurance, it was actually pretty common for banks to reserve the right to delay withdrawals in the event of a run. Usually they specified a greater than normal interest rate in this case and so long as the bank was still fundamentally sound, this didn't usually cause any harm to their customers. If you wanted to withdraw $100, you would go to the bank and obtain a $100 withdrawal coupon which you could then sell for $100. Since the bank was still fundamentally sound, they could issue you a coupon worth more than $100 easily (against future loan returns). This tends to bankrupt the bank (because the coupons pay a higher interest rate than their loans and everyone runs to get the valuable coupons), but it doesn't significantly harm the customers.
Essentially, a bank has to ensure that they enough of a reserve to cover any liquidity crisis they might experience. So long as their loan portfolio remains basically sound, this isn't difficult. Of course, this fails utterly if the loans suffer massive default. This is what caused many banks to collapse after the mortgage meltdown, forcing the government to cover the losses through the FDIC. This is what it seems happened to Patrick.