5 ms·

This is the crux of the problem. SVB may have intended to hold to maturity, but the market forced it to sell to raise cash. You may hold 100K in treasuries tod

This is the crux of the problem. SVB may have intended to hold to maturity, but the market forced it to sell to raise cash. You may hold 100K in treasuries today, but if your employer can't make payroll, you're gonna sell to pay rent.

danaris 4y ago
> but the market forced it to sell to raise cash. Can you clarify this part? I'm not super familiar with the intricacies of banking, so my guess is that this is simply due to part of it I don't know about, but...given all the "creative financial instruments" I've heard about since the runup to the 2008 crash, I have to wonder if this "market force" was at least partly due to something SVB was doing that wasn't terribly wise.
- dragontamer 4y ago
  > was at least partly due to something SVB was doing that wasn't terribly wise.\\\ A startup-focused bank probably shouldn't have been investing into 10Y, 20Y, or 30Y US Treasuries, when their customers might only have 2 or 3 years worth of life in them. So yeah, there's a bit of stupidity here for sure. But its the kind of stupid that I can imagine a lot of banks making.
jojosbuddy 4y ago
Aside from all those tech founders (today's LP VCs) from 2008-2020 likely held equity/deposits at SVB, and the sheer call out by them to make a run on the bank yesterday just broke the bank. The speed of fintech makes it feel coordinated. Funny it seems like VC GPs were on the horn yesterday to withdraw, and I know a number of LPs telling me last Sun/Mon they'll be "out of the country" next month. Looks like some folks had early info.
slymon99 4y ago
@danaris - if you are a bank and people want to withdraw money, you need cash to pay them. By "the market" we mean the banks depositors who withdrew their case (partially due to these very concerns, hence why bank runs are called bank runs)

5 ms·

This is the crux of the problem. SVB may have intended to hold to maturity, but the market forced it to sell to raise cash. You may hold 100K in treasuries tod

by Octokiddie 4y ago

danaris 4y ago
> but the market forced it to sell to raise cash. Can you clarify this part? I'm not super familiar with the intricacies of banking, so my guess is that this is simply due to part of it I don't know about, but...given all the "creative financial instruments" I've heard about since the runup to the 2008 crash, I have to wonder if this "market force" was at least partly due to something SVB was doing that wasn't terribly wise.
- dragontamer 4y ago
  > was at least partly due to something SVB was doing that wasn't terribly wise.\\\ A startup-focused bank probably shouldn't have been investing into 10Y, 20Y, or 30Y US Treasuries, when their customers might only have 2 or 3 years worth of life in them. So yeah, there's a bit of stupidity here for sure. But its the kind of stupid that I can imagine a lot of banks making.
jojosbuddy 4y ago
Aside from all those tech founders (today's LP VCs) from 2008-2020 likely held equity/deposits at SVB, and the sheer call out by them to make a run on the bank yesterday just broke the bank. The speed of fintech makes it feel coordinated. Funny it seems like VC GPs were on the horn yesterday to withdraw, and I know a number of LPs telling me last Sun/Mon they'll be "out of the country" next month. Looks like some folks had early info.
slymon99 4y ago
@danaris - if you are a bank and people want to withdraw money, you need cash to pay them. By "the market" we mean the banks depositors who withdrew their case (partially due to these very concerns, hence why bank runs are called bank runs)