[lottin]

The percentages don't matter. Banks set aside a certain amount of capital for the only purpose of absorbing losses. A bank that is well-run will have allocated the right amount of capital in proportion to the risks that it has taken.

[SilasX]

The same could have been said of SVB. And, surprise, they didn’t set aside a loss buffer equal to 5.6% of deposits either, just to cover that part of the portfolio, because that’s not feasible.

[lottin]

The job of any bank including SVB is to manage financial risk. If they can't do that, it means they can't do their job, and they deserve to go out of business.

[SilasX]

What do you think your comments are adding to the discussion here? You’re going in circles and I don’t see the coherent point. The original criticism was that WF criticized SVB while still holding a sufficiently dangerous fraction of their portfolio in the same assets.

If you’re not speaking to that criticism but just giving vague generalities about how banks need to manage risk right, then you don’t need to make a comment at all.

Edit: Hit my comment rate limit so...

Sorry, I don't see the answer -- again, you were just speaking in vague generalities about how "banks need to manage risk right". Doesn't get to the argument you need, which is "this why WF can suffer a 5.6% loss on its loan portfolio but still satisfy demand deposits, and why it's a difference in kind, not degree, from an 11.2% loss happening to SVB".

The point was never that the percentage doesn't ever matter at all, but that both WF and SVB hold way too much in fixed rate long-term loans.

So if we're really going to go there, I think the substantive points went over your own head. When you're ready to say something more informative than "it's a bank's job to manage risk", I'll be ready to learn from it and appreciate the insight you're bringing.

[lottin]

I was answering your question: "The percentages [of dangerous assets that they hold] don't matter." But apparently the answer went over your head. Never mind.