[oarabbus_]

This seems like a rather exaggerated framing to absolve SVB of any responsibility for what happened, and is not accurate.

SVB overleveraged into long-term bonds in 2021 when interest rates were at an all time low. A financial institution/bank normally would hold a mix of maturities in their fixed-income holdings - 1 year, 3 year, 10 year - to maintain liquidity and reduce insolvency risk.

"If they were able to hold them to maturity there wouldn't have been a problem" does not make any sense - it's as if your company told you just wait an extra month for your paycheck, there won't be a problem. And then you told the mortgage lender to forget about this month's payment - if they just wait until next month, there won't be a problem.

Not to mention they had well over a year's advance notice to do _something_ because they knew exactly by how much their assets would decline in value. In March 2022 the Fed announced the decision to raise rates and continuing to do into 2023. By Sept they had announced the terminal rates would be over 4%, and have continued to openly increase that target since then.

Bond prices moving inversely to interest rates is Econ 101; anyone (at SVB) could've quite literally calculated their ~$25B 10-year 1.8% notes would drop by _at least_ $5B in 2023 before the terminal rate is even reached.

The run was the result of a clearly impending liquidity issue due to lack of near-maturation assets, not the other way around.

[vikramkr]

Why would my explanation read as absolving them of responsibility? The folks running the bank are professional bankers. They took a position that massively exposed them to interest rate risk and market cycle risk (when all of their clients are concentrated in a single industry!). As I said, they'd have been fine if they didn't need to cash in on those bonds or if interest rates stayed low. Making that assumption that they wouldn't need to sell (i.e. deposits would keep coming in) was obviously very stupid and failing to hedge interest rate risk (when high interest rates might directly lead to lower deposits because of the vc/startup client base!) is an even higher level of stupid that led to the whole thing collapsing in 48 hours. That doesn't invalidate that the bonds are still good/they have assets greater than deposits (though obvioust rhere could be fraud/devaluation when they try to sell) and that the FDIC has a pretty good chance of getting most people's money back (eventually, hopefully).

[rcme]

The main cause of the issue was that deposits increased so much over the pandemic and then decreased a lot simultaneously with a huge spike in interest rates. The Fed and the government have (unintentionally) engineered a banking crisis. A lot of banks are having liquidity issues now.