4 ms·

I remember seeing a list on Reddit the other day showing other banks that also were heavily invested in MBSes similar to what SVB were invested in, and First Re

I remember seeing a list on Reddit the other day showing other banks that also were heavily invested in MBSes similar to what SVB were invested in, and First Republic was on that list. I assume the market quickly lost confidence in all of the banks on that list.

logicfiction 4y ago
Was MBS (mortgage backed securities) a typo here? My understanding was SVB had a huge long term treasury position on the books from before interest rate hikes that was in the red against the market. And their second largest tier was direct loans to things like startups that weren't asset backed but instead default to warranties on the companies taking the loans (I'm not close enough to this to really say that more specifically).
- dahdum 4y ago
  They had over $80 billion of MBS as HTM. > SVB’s mistake was investing in longer-term mortgage securities with more than 10 years to maturity, rather than shorter-maturity Treasuries or mortgage issues maturing in less than five years. This led to an asset/liability mismatch. https://www.barrons.com/articles/svb-silicon-valley-bank-rates-securities-693c931c https://www.barrons.com/articles/svb-silicon-valley-bank-rat...
- pclmulqdq 4y ago
  They had several MBSes on the books, too. Both MBSes and treasuries are long-term fixed-income products. It's not as bad as they used to be in 2008 - they have largely fixed the "gamesmanship" that got everyone in trouble then.
- fnordpiglet 4y ago
  They were agency backed cash MBS, which are basically default risk free as defaults come out as prepayments and are pretty liquid. They’re not at all like the subprime credit default swaps on CDOs that were so problematic in their risk ratings.
downrightmike 4y ago
The current 6 month crash is actually worse than 2008 https://www.youtube.com/watch?v=XMTL2XGKKpI https://www.youtube.com/watch?v=XMTL2XGKKpI
- nerdponx 4y ago
  What crash?
  - downrightmike 4y ago
    Home sales, down 6 months in a row, this is only the third time it has happened. The numbers are lower than the last time, 2008.

logicfiction 4y ago

Was MBS (mortgage backed securities) a typo here? My understanding was SVB had a huge long term treasury position on the books from before interest rate hikes that was in the red against the market. And their second largest tier was direct loans to things like startups that weren't asset backed but instead default to warranties on the companies taking the loans (I'm not close enough to this to really say that more specifically).

dahdum 4y ago
They had over $80 billion of MBS as HTM. > SVB’s mistake was investing in longer-term mortgage securities with more than 10 years to maturity, rather than shorter-maturity Treasuries or mortgage issues maturing in less than five years. This led to an asset/liability mismatch. https://www.barrons.com/articles/svb-silicon-valley-bank-rates-securities-693c931c https://www.barrons.com/articles/svb-silicon-valley-bank-rat...
pclmulqdq 4y ago
They had several MBSes on the books, too. Both MBSes and treasuries are long-term fixed-income products. It's not as bad as they used to be in 2008 - they have largely fixed the "gamesmanship" that got everyone in trouble then.
fnordpiglet 4y ago
They were agency backed cash MBS, which are basically default risk free as defaults come out as prepayments and are pretty liquid. They’re not at all like the subprime credit default swaps on CDOs that were so problematic in their risk ratings.

downrightmike 4y ago

The current 6 month crash is actually worse than 2008 https://www.youtube.com/watch?v=XMTL2XGKKpI https://www.youtube.com/watch?v=XMTL2XGKKpI

nerdponx 4y ago
What crash?
- downrightmike 4y ago
  Home sales, down 6 months in a row, this is only the third time it has happened. The numbers are lower than the last time, 2008.