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Just so we are all fully aware: SVB bet in ~2020 that interest rates they offer could be well below 1% (given their operating costs and what not) for 10 years.
by stefan_ 4y ago
Just so we are all fully aware: SVB bet in ~2020 that interest rates they offer could be well below 1% (given their operating costs and what not) for 10 years. Obviously, by 2023 already, depositors were expecting much more.
So, yeah, these MBS will probably pay out when held to maturity, but their customers didn't buy MBS, they deposited their money in a bank.
- beezle 4y agoLet us hope that the bank did not "bet" and instead had a decision making process.
- caddemon 4y agoI mean objectively the bank bet that interest rates wouldn't go up, they took a massive unhedged position in exactly that. I hope the bank thought it was betting, because if they didn't realize they were betting on interest rates staying low then that is a shocking level of incompetence. They probably thought it was a safe bet, but it was a bet nonetheless with obvious risk if they were wrong.
- beezle 4y agoBy your definition any position that a bank takes is a "bet".