One bank yoloing on 10 year mortgage backed securities without interest rate hedges, and underwriting deposits with 97% over the FDIC insurance limit does not a crisis make. This is not 2008, this bank was not regulated by the Fed or the OCC. State regulators in CA failed to do their jobs and bank managers were reckless just like many of the VC and Startup companies who banked there. This is a story of greed and carelessness and is isolated mostly to startups. This is not GFC 2.0 and I’m sick of those takes. Edit: adding clarification via @Carda “All banks are regulated by the Federal Reserve and subject to Dodd Frank, just lesser standards for things like stress testing for smaller banks as they are deemed less critical to the system. There are state regulators as well.”
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Low interest rate products are supposed to be safer… until it’s for 10yrs at 80B rofl Such a mid end fitting a regional bank.
Please elaborate
Good luck explaining that simple concept to the folks on this platform. I'm baffled by the collective display of IQ I've seen over the past few days from a community of very high TC individuals.
Ok Micro
That’s because high TC in tech has no correlation to intelligence anymore.
It’s not a bad bank, it’s a victim of double correlations. Big banks got bigger after the GFC of 2008. The only way for smaller banks to survive was to go niche, like cater specifically to startups. However this creates correlation; suddenly all startups needed to pull out capital due to funding shortages. On the asset side, we also saw massive correlated drops in MBS, treasuries and stocks due to unprecedented rate of fed increases. So they couldn’t sell anything without losses. But they had to sell because since all clients were withdrawing. Long story short, all small niche banks, whether in tech, crypto, etc. are at risk now.
Will CA go bankrupt because startup financing and eventually exits suffer? Or maybe CA will just raise taxes again.
That's what Lehman said in 2008.
Lehman said they are not Lehman?
thank you! the ceo need to go jail
SVB *was* regulated - all banks with a bank charter are regulated - just not to the same standards as bigger banks.
I thought they were regulated by the State for the most part? And like you said, different standards as they were not subject to Dodd Frank
All banks are regulated by the Federal Reserve and subject to Dodd Frank, just lesser standards for things like stress testing for smaller banks as they are deemed less critical to the system. There are state regulators as well.
It’s worse than Lehman that it’s forcefully shutdown by government
They were insolvent the moment they sold their held-to-maturity securities. When a bank is insolvent, they close.
Lehman was an investment bank, SVB is a commercial bank. Two different things.