4 ms·
This round of bank failures was special because the debt held by these banks lost value because there is better stuff on the market, not because there was anyth
by unyttigfjelltol 4y ago
This round of bank failures was special because the debt held by these banks lost value because there is better stuff on the market, not because there was anything intrinsically uncollectable about the original debt. In fact, the debt probably is pretty similar to stuff held by everyone else in this ecosystem. This provides flexibility to meet the urgency of the situation, and FDIC, Fed, Treasury are simply saying "we know what the stuff is worth and there is enough money in the pot to make all depositors hole." "No more bank runs at this time please."
- Denvercoder9 4y ago> In fact, the debt probably is pretty similar to stuff held by everyone else in this ecosystem. Anyone responsible that ended up holding similar bonds would've bought interest rate swaps to hedge their interest risk.
- jacquesm 4y agoI would be careful using the past tense on this one. Tomorrow morning will be very interesting in a bad sort of way. A war, a pandemic, a financial crisis. What's next?
- rybosworld 4y ago> In fact, the debt probably is pretty similar to stuff held by everyone else in this ecosystem. This doesn't appear to be true. Everything I've read points to SVB being truly unique in their lack of risk management. SVB left these positions unhedged against rates. That is very atypical.