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>sometimes it's better for the public not to know how bad things have gotten behind the scenes Better for whom? It seems to me that institutions that serve th

>sometimes it's better for the public not to know how bad things have gotten behind the scenes Better for whom? It seems to me that institutions that serve the public should do so with transparency. The idea that “the experts” know better than “the public” is a dangerous and elitist one. The suggestion that “the experts” be allowed to hide their math while they fumble at the economy trying to make a buck is absurd

cmeacham98 4y ago
What does "institutions that serve the public" mean? It sounds like you're trying to say 'government-run' (like as in 'public sector'), but SVB was a private company. If we're including private companies, how far does that go? Should I be allowed to look at the financials of local restaurants?
- function_seven 4y ago
  No, but you can see their Health Department inspection reports. That's a good analogy.
- quesera 4y ago
  > SVB was a private company. I think you mean something different, but SVB went public in 1987. Transparency in publicly-traded companies is obviously important. SVB was subject to all of the usual reporting and disclosure rules.
btilly 4y ago
The problem is that expectations shape reality. So if experts are a bit worried, and say so, this may cause a public panic. The panic turned a potential problem that may have never manifested into an immediate disaster. Given this fact, should experts say things that may cause this panic?
- geysersam 4y ago
  Maybe the oversized reaction is a consequence of historical lack of transparency? If so, it's unlikely that more obfuscation is the solution.
- deleted 4y ago
  [deleted]
- cameldrv 4y ago
  In this case, IMO it was more than a potential problem. On a mark-to-market basis SVB was certainly undercapitalized and possibly insolvent last week. Had there been no run, over the next year, SVB would have had three choices over the next year or so: 1. Keep deposit rates near zero, in which case depositors would progressively realize that they could be making 4.5% on their money elsewhere and withdraw their funds. This ends up being exactly the same as the bank run that happened, just in slower motion. 2. Raise deposit rates, in which case, they would start losing money until they were forced to sell assets to pay depositors their interest. Those HTM assets would then be marked to market and the bank would be officially undercapitalized and taken over by the FDIC. 3. Raise capital or sell the bank. They tried raising capital unsuccessfully. Given this, it's questionable whether they would have been successful at selling the bank because it's unclear whether the bank had a positive value.
  - remote_phone 4y ago
    On a mark to market basis ALL banks are undercapitalized. What do you think the banks did in the last several years besides buy bonds at 1.5%? That’s why there’s a distinction because it gives an invalid view as well. Plus there’s a footnote in the 10K that gives the value at fair value.
    - baq 4y ago
      If a bank has a risk officer (turns out a big if after all) it should get some interest rate swaps
      - landemva 4y ago
        SVB's risk officer had a masters degree in public administration. That hire was there to fill the org chart while the bosses continued to cash out options and take home their pay. Keep the paydays going.
      - fshbbdssbbgdd 4y ago
        Who’s the counterparty for those swaps? They sound systemically important.
jjeaff 4y ago
Come on now. The "experts" do know more than the public. Half of the public is below average, in fact. Now, what could be quibbled with is who is actually an expert. Having a lot of money and having founded a successful tech company 25 years ago does not make you an expert at everything.
- sgregnt 4y ago
  > Half of the public is below average, in fact. Not necessary
  - ncallaway 4y ago
    I mean, it depends on the average. We can (and often do) select an average where it is necessarily so.
    - shkkmo 4y ago
      Please name an average that necessarily has "half of the population is below average", because that is not true for median, mode or the traditional average.
      - ncallaway 4y ago
        That, uh...is true for the median. That's pretty much the definition of the median. > the median is the value separating the higher half from the lower half of a data sample, a population, or a probability distribution
        shkkmo 4y ago
        So what is the median of the set (5,1,1,1,1,1), does half of that set have a value below the median?
      - chmod775 4y ago
        Not an average, but their argument is salvageable: In a perfect world, exactly half of a population will be (equal to or) below any average when frequency is a normal distribution. Like IQ scores. So when they say "half of the population is below average [IQ]", it's not complete nonsense.

cmeacham98 4y ago

What does "institutions that serve the public" mean? It sounds like you're trying to say 'government-run' (like as in 'public sector'), but SVB was a private company. If we're including private companies, how far does that go? Should I be allowed to look at the financials of local restaurants?

function_seven 4y ago
No, but you can see their Health Department inspection reports. That's a good analogy.
quesera 4y ago
> SVB was a private company. I think you mean something different, but SVB went public in 1987. Transparency in publicly-traded companies is obviously important. SVB was subject to all of the usual reporting and disclosure rules.

btilly 4y ago

The problem is that expectations shape reality. So if experts are a bit worried, and say so, this may cause a public panic. The panic turned a potential problem that may have never manifested into an immediate disaster. Given this fact, should experts say things that may cause this panic?

geysersam 4y ago
Maybe the oversized reaction is a consequence of historical lack of transparency? If so, it's unlikely that more obfuscation is the solution.
deleted 4y ago
[deleted]
cameldrv 4y ago
In this case, IMO it was more than a potential problem. On a mark-to-market basis SVB was certainly undercapitalized and possibly insolvent last week. Had there been no run, over the next year, SVB would have had three choices over the next year or so: 1. Keep deposit rates near zero, in which case depositors would progressively realize that they could be making 4.5% on their money elsewhere and withdraw their funds. This ends up being exactly the same as the bank run that happened, just in slower motion. 2. Raise deposit rates, in which case, they would start losing money until they were forced to sell assets to pay depositors their interest. Those HTM assets would then be marked to market and the bank would be officially undercapitalized and taken over by the FDIC. 3. Raise capital or sell the bank. They tried raising capital unsuccessfully. Given this, it's questionable whether they would have been successful at selling the bank because it's unclear whether the bank had a positive value.
- remote_phone 4y ago
  On a mark to market basis ALL banks are undercapitalized. What do you think the banks did in the last several years besides buy bonds at 1.5%? That’s why there’s a distinction because it gives an invalid view as well. Plus there’s a footnote in the 10K that gives the value at fair value.
  - baq 4y ago
    If a bank has a risk officer (turns out a big if after all) it should get some interest rate swaps
    - landemva 4y ago
      SVB's risk officer had a masters degree in public administration. That hire was there to fill the org chart while the bosses continued to cash out options and take home their pay. Keep the paydays going.
    - fshbbdssbbgdd 4y ago
      Who’s the counterparty for those swaps? They sound systemically important.

jjeaff 4y ago

Come on now. The "experts" do know more than the public. Half of the public is below average, in fact. Now, what could be quibbled with is who is actually an expert. Having a lot of money and having founded a successful tech company 25 years ago does not make you an expert at everything.

sgregnt 4y ago
> Half of the public is below average, in fact. Not necessary
- ncallaway 4y ago
  I mean, it depends on the average. We can (and often do) select an average where it is necessarily so.
  - shkkmo 4y ago
    Please name an average that necessarily has "half of the population is below average", because that is not true for median, mode or the traditional average.
    - ncallaway 4y ago
      That, uh...is true for the median. That's pretty much the definition of the median. > the median is the value separating the higher half from the lower half of a data sample, a population, or a probability distribution
      - shkkmo 4y ago
        So what is the median of the set (5,1,1,1,1,1), does half of that set have a value below the median?
    - chmod775 4y ago
      Not an average, but their argument is salvageable: In a perfect world, exactly half of a population will be (equal to or) below any average when frequency is a normal distribution. Like IQ scores. So when they say "half of the population is below average [IQ]", it's not complete nonsense.