3 ms·

This isnt the truth. 10% of their portfolio was worthless VC loans.

• walrus01 4y ago
  They also hold (held?) $80bn in mortgage backed securities, which I'm consistently suspicious of how much is really grade A investment material.
  • cameldrv 4y ago
    MBS having too many defaults was the problem in 2008, which I think is making people turn their attention to this issue. However, we are in a different situation today. IMO the tradable securities that SVB held are probably the least of their problems. The MBS certainly has the problem of being worth less due to higher interest rates. The MBS at least though is tradable and has a market price. Their own book of loans though is much larger and is subject to the same interest rate problems as their MBS and treasuries, and in addition to having lost value due to interest rate issues, it may now have default issues as well. Not a good combination.
• raws 4y ago
  Another 10% was low % 5yrs bonds which they had to sell early with penalties to cover the run on the bank which incurred considerable losses. I would think a VC bank knows that some of its VC investments would not outperform. My understanding is that if the run does not happen, it's business as usual, nothing like '08 when borrowers started failing to pay en mass on internationally overrated loans in AAApackages.
• tomatocracy 4y ago
  Bank regulations are designed to ensure that this type of thing is a shareholder (and pref/AT1) risk - I haven't seen any claims that they were inappropriately or incorrectly rating those risks for capital purposes (but perhaps they were, who knows).