[sgc]

But that is not what happened here AFAIK. They got burned by being too conservative and investing in government backed securities.

I think from their perspective, they thought they understood tech better than other banks, so thought that they could better analyze the risk (thereby not misclassifying many companies as risky) and use that as a competitive advantage. Right now, it does not look like that part of their business model failed at all.

[andsoitis]

>They got burned by being too conservative and investing in government backed securities.

Just because one is conservative, does not automatically mean one is not taking on risk.

In banking, interest rate risk is the exposure of a bank’s current or future earnings and capital to adverse changes in market rates. If they put all their money into govt backed securities, they also took on portfolio risk.

[s1artibartfast]

I'm pretty sympathetic to SV bank here, but wonder if it was an option to Simply hold cash as a less risky option still when their Business tripled in 2021. They were in a very unique position. When it's all gets Unwound, it will be interesting to see what was going on internally with their decision making and if their Chief risk officer was on board with this or not.

[skeeter2020]

A bank would be better to not take the deposits than hold it all as cash though.

[s1artibartfast]

interesting, why would that ever be the case?

Cash on hand would clearly help with a bank run and could be slowly invested in treasuries over a longer duration.

[fnsa]

It was not conservative at all! They invested short term deposits in long term bonds (MBS)

[ianbotham]

that's how banking works. and also why you have depositor insurance

[JohnFen]

Yes, my comment was about exhibitapp's experience, not the SVB collapse.