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My understanding is this isn't a "run on the bank" situation, they were too successful growing their deposit book and couldn't grow their loan assets fast enoug

My understanding is this isn't a "run on the bank" situation, they were too successful growing their deposit book and couldn't grow their loan assets fast enough to keep pace. So they bought a lot of MBS so they at least were earning some yield with which to pay interest on their deposit liabilities but took heavy losses when rates moved against them so were inadequately capitalised. They tried to raise additional capital and a couple of key miscommunications in that process really spooked the market and they suddenly collapsed.

ec109685 4y ago
SVB was offering above market interest rates though: According JPM: “At the end of 2022, SIVB only offered 0.60% more on deposits than its peers as compensation for the risks illustrated below; in 2021 this premium was 0.04%.”
- dehrmann 4y ago
  You can find FDIC-insured savings accounts paying 4%, and bank interest rates are all over the places right now, so I wouldn't read into .6%. Calling out the 2021 number is disingenuous because the fed funds rate in 2021 was essentially 0%. Its's 4.57% right now. You're comparing kumquats and grapefruit.
  - ec109685 4y ago
    It shows they were being aggressive with their investments compared to parking things in the most safe vehicle possible: https://am.jpmorgan.com/content/dam/jpm-am-aem/global/en/insights/eye-on-the-market/silicon-valley-bank-failure-amv.pdf https://am.jpmorgan.com/content/dam/jpm-am-aem/global/en/ins...
ru552 4y ago
$40b was withdrawn Friday morning. If that’s not a run, I don’t know what is.
- twelve40 4y ago
  the run was a consequence of the bank's mismanagement, not the cause
  - ummonk 4y ago
    Without the run there is a decent chance that the bank would have been able to complete its stock offering, recapitalize, and remain in operations despite past mismanagement. So while information about the mismanagement is what caused observers to trigger a run on the bank, it was the run itself that did it in. Now there is risk of contagion where better managed regional banks are also at risk of suffering runs on the bank.
    - twelve40 4y ago
      sure, a restaurant that serves rotten food could have fired the chef and reinvented itself if it wasn't for all the pesky customers who stopped going there

ec109685 4y ago

SVB was offering above market interest rates though: According JPM: “At the end of 2022, SIVB only offered 0.60% more on deposits than its peers as compensation for the risks illustrated below; in 2021 this premium was 0.04%.”

dehrmann 4y ago
You can find FDIC-insured savings accounts paying 4%, and bank interest rates are all over the places right now, so I wouldn't read into .6%. Calling out the 2021 number is disingenuous because the fed funds rate in 2021 was essentially 0%. Its's 4.57% right now. You're comparing kumquats and grapefruit.
- ec109685 4y ago
  It shows they were being aggressive with their investments compared to parking things in the most safe vehicle possible: https://am.jpmorgan.com/content/dam/jpm-am-aem/global/en/insights/eye-on-the-market/silicon-valley-bank-failure-amv.pdf https://am.jpmorgan.com/content/dam/jpm-am-aem/global/en/ins...

ru552 4y ago

$40b was withdrawn Friday morning. If that’s not a run, I don’t know what is.

twelve40 4y ago
the run was a consequence of the bank's mismanagement, not the cause
- ummonk 4y ago
  Without the run there is a decent chance that the bank would have been able to complete its stock offering, recapitalize, and remain in operations despite past mismanagement. So while information about the mismanagement is what caused observers to trigger a run on the bank, it was the run itself that did it in. Now there is risk of contagion where better managed regional banks are also at risk of suffering runs on the bank.
  - twelve40 4y ago
    sure, a restaurant that serves rotten food could have fired the chef and reinvented itself if it wasn't for all the pesky customers who stopped going there