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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 t
by 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 agoThey 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 agoThey 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 agoThey 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.