3 ms·

Socialize the losses, privatize the gains, nice

• ummonk 4y ago
  What gains? Depositors weren't getting gains, they were storing money in very low interest (far below inflation or money market yields) checking and savings accounts.
  • yunwal 4y ago
    Depositors were getting gains (4.5% interest rate which is very high compared to similar banks, and for something that’s supposed to be risk-free). The reason these rates were achievable is because SVB lobbied to remove regulations and allow them to engage in risky behavior.
    • rashkov 4y ago
      What specific risky behavior are you referring to? Everything I’ve read points to the fact that they bought a ton of long term US treasury bonds at a low interest rate. Obviously this worked out very poorly for them, but I wouldn’t call this risk seeking behavior.
      • yunwal 4y ago
        SVB lobbied congress to not be subject to liquidity stress tests and got caught with their pants down. They didn’t have to buy 10 year bonds. They also didn’t have to buy volatile mortgage securities, which they did. They were obviously playing fast and loose with the rules (or making their own rules as they went).