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What exactly are you saying, that it would have been illegal for a bank to allow its risk officer to resign or to leave?

berkeleyjunk 4y ago
I don't think so. I think they are saying that if the original regulations were still in place, the bank would not have been able to make these "investments" even without a Risk Officer.
- listenallyall 4y ago
  Isn't that just as bad? If it's illegal to act without a risk manager, you can't make bad risk decisions or investments like SVB did, but you can't make good or necessary ones either.
- kurthr 4y ago
  Exactly, listen to anyone in banking. The idea of buying and holding such long dated MBS and LETTING YOUR HEDGES EXPIRE just as the Fed was raising rates is just unheard of. Even if they were allowed, it was spectacularly unwise and not just in hindsight. https://youtu.be/GdfYnqyu7v8 https://youtu.be/GdfYnqyu7v8 There are multiple banking insiders who've discussed this that come to the same conclusion, here's a simple one for those who don't want to do any research, just WTF?!? But why were they allowed to do this? Why could they add $120B in low interest bonds when rates were low and lots of cash was coming in during the pandemic? Because the regulations were loosened in May of 2018 with lobbying by SVB (and possibly Thiel himself) they were just below the $250B limit. Also, what the hell were companies doing with $250M deposits earning nothing (not being swept into MoneyMarkets), when they could have been making $10M a year and been safe from losing it? Apparently, because their VCs recommended it.
michaelt 4y ago
If only workers could sign contracts with some sort of 'notice period' allowing their employer time to hire a replacement....
- listenallyall 4y ago
  ...and if they get hit by a bus? That would be illegal also?
  - aaomidi 4y ago
    There are obviously legal exceptions? It could be that you make a notice to the government that this is happened and they just increase scrutiny on you until you’ve hired someone? It’s not like this is the only business with legal requirements for specific roles.
  - michaelt 4y ago
    If only important executives could have deputies, who could become 'Acting CRO' on an interim basis when needed...
    - listenallyall 4y ago
      How do you know Silicon Valley Bank didn't?
cowsandmilk 4y ago
It means when the CRO left, the bank would have had to immediately appoint someone else into the position. Which all banks should be prepared to do. That is basic succession planning. What is especially ridiculous with SVB is the CEO made the CRO give up the position and remained employed there for several more months. This wasn’t a surprise. The CEO forced the resignation on the CEO’s schedule with no successor in the wings.
- listenallyall 4y ago
  Curious how you know they didn't? Or at least have someone performing the same tasks?

berkeleyjunk 4y ago

I don't think so. I think they are saying that if the original regulations were still in place, the bank would not have been able to make these "investments" even without a Risk Officer.

listenallyall 4y ago
Isn't that just as bad? If it's illegal to act without a risk manager, you can't make bad risk decisions or investments like SVB did, but you can't make good or necessary ones either.
kurthr 4y ago
Exactly, listen to anyone in banking. The idea of buying and holding such long dated MBS and LETTING YOUR HEDGES EXPIRE just as the Fed was raising rates is just unheard of. Even if they were allowed, it was spectacularly unwise and not just in hindsight. https://youtu.be/GdfYnqyu7v8 https://youtu.be/GdfYnqyu7v8 There are multiple banking insiders who've discussed this that come to the same conclusion, here's a simple one for those who don't want to do any research, just WTF?!? But why were they allowed to do this? Why could they add $120B in low interest bonds when rates were low and lots of cash was coming in during the pandemic? Because the regulations were loosened in May of 2018 with lobbying by SVB (and possibly Thiel himself) they were just below the $250B limit. Also, what the hell were companies doing with $250M deposits earning nothing (not being swept into MoneyMarkets), when they could have been making $10M a year and been safe from losing it? Apparently, because their VCs recommended it.

michaelt 4y ago

If only workers could sign contracts with some sort of 'notice period' allowing their employer time to hire a replacement....

listenallyall 4y ago
...and if they get hit by a bus? That would be illegal also?
- aaomidi 4y ago
  There are obviously legal exceptions? It could be that you make a notice to the government that this is happened and they just increase scrutiny on you until you’ve hired someone? It’s not like this is the only business with legal requirements for specific roles.
- michaelt 4y ago
  If only important executives could have deputies, who could become 'Acting CRO' on an interim basis when needed...
  - listenallyall 4y ago
    How do you know Silicon Valley Bank didn't?

cowsandmilk 4y ago

It means when the CRO left, the bank would have had to immediately appoint someone else into the position. Which all banks should be prepared to do. That is basic succession planning. What is especially ridiculous with SVB is the CEO made the CRO give up the position and remained employed there for several more months. This wasn’t a surprise. The CEO forced the resignation on the CEO’s schedule with no successor in the wings.

listenallyall 4y ago
Curious how you know they didn't? Or at least have someone performing the same tasks?