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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]This is bad. For those of you that are going to say “this is a west coast big tech problem” it’s going to be felt nationwide, especially given the remote work environment. 
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How does remote work relate to this?[/quote]

This was not about remote work.  It was about SVB who handed out loans like crazy during the 2020-21 tech boom. Then when tech started falling apart the last year, they took the money out the bank. Combined with bonds falling and rising interest rates, more investors pulled out. The writing was on the wall 2 years ago. Basically; the Freddie/Fannie/Lehman 2007 situation all over again except instead of housing, it was tech startups.  [/quote]

Virtually every word you wrote is wrong.[/quote]

DP. Here is an article that summarizes what happened, I don’t think you have an understanding of events of what happened but PP on largely correct. The trouble at the bank has a very tangential relation to mortgages. You can switch out MBS with treasuries and same story. They got bonds that at super low rates and had to sell at a loss to raise funds because their depositors are pulling out more money and depositing less due to headwinds in the startup space.

https://www.netinterest.co/p/the-demise-of-silicon-valley-bank
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This is a good article.

I do disagree with a paragraph towards the end that SVB would have been better off if it had been subject to the standard liquidity requirement (liquidity coverage ratio or LCR) that applies to larger banks and has helped Credit Suisse to stay in the game.

The ratio treats held to maturity (HTM) government securities as liquid assets when in fact if a bank sells even one of those securities to raise cash it has to realize the losses on the entire HTM portfolio.  SVB had nearly $75 billion of HTM securities, most in governments, and, thus, would have met the LCR handily.  However, if SVB sold even one of these securities it would have become instantly insolvent because it would have had to realize the embedded unrealized mark to market losses in its entire HTM portfolio. These losses were about the size of its tangible equity and would have wiped out all or nearly all the bank's equity.

A bank can borrow against its HTM government securities to raise cash without having to realize the embedded losses. But it is expensive and there are limits as SVB found with its Federal Home Loan Bank borrowings.

[/quote]

Can we talk about how there is no reason the FHLB should have SVB as a member? Their purpose is supposed to be supporting the housing market.

I know that FHLB advances have a super priority. I wonder if that’s gonna mess up the certificates to the uninsured depositors.

FHFA is an incompetent sh* show anyway. [/quote]

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