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The regulation to my knowledge does require marking to maturity. Yes as I have commented elsewhere in this post, all banks do this. SVB had the unique situatio
by eftychis 4y ago
The regulation to my knowledge does require marking to maturity. Yes as I have commented elsewhere in this post, all banks do this.
SVB had the unique situation of being the canary in the mine, as they had to get a lot of MBS during low interest rates of 2021/2020. Your question is the jackpot one, yes: how many other banks are following closely by.
If the Fed continues or increases the rate hike I would be surprised if we don't hear more -- assuming no other action.
The silver lining might be that SVB might give the heads up for the Fed, FDIC and government to act.
- opportune 4y agoSure that is the regulation, but just because it’s a regulation doesn’t mean it’s all you should do for risk management, it’s just the bare minimum. If the present value of a bank’s assets are lower than the present value of deposits, that is insolvency: calling it illiquidity just because the bank doesn’t want to sell its actually-liquid underwater assets right now is a cop-out.