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by maxbond 1196 days ago
It's not that they shouldn't have bought treasuries, it's that they shouldn't have bought such long dated treasuries, and if they did, they should have hedged against interest rates, and if they didn't, they should have realized the loss when it was smaller. But they did none of those things and it was fatal to them.

The Fed kept making it clear that it was raising rates, and it seems like SVB just slipped quietly into that good night without lifting a finger to save itself. Which is bizarre and confusing and there must be more to the story (and details are coming out, like the risk manager role remaining open for nine months), but it does seem like crazy risks were taken. But not in pursuit of additional gains, like we are used to seeing, but it's looking more like negligence or a misunderstanding of their position.
1 comments
reducesuffering 1196 days ago
They didn't buy treasuries, they bought mortgage-backed securities.
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maxbond 1196 days ago
You can `s/treasuries/mortgage-backed securities/g` into my comment and it doesn't change much, but my understanding is that they had a lot of treasuries (not to the exclusion of having MBSs).

> To fund the redemptions, on Wednesday Silicon Valley Bank sold a $21bn bond portfolio consisting mostly of US Treasuries.

https://www.theguardian.com/us-news/2023/mar/10/silicon-vall...

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reducesuffering 1196 days ago
They had very few Treasuries. Latest balance sheet from 2 months ago had $1B Treasuries compared to $91B MBS and $212B assets. https://www.cnbc.com/quotes/SIVB?tab=financials

All your link shows is that Guardian, Reuters, and others have equally as bad reporting as commenters here, just parroting each other constantly...

SVB's actual announcement says "Additionally, earlier today, SVB completed the sale of substantially of its available for sale securities portfolio. SVB sold approximately $21 billion of securities, which will result in an after tax loss of approximately $1.8 billion in the first quarter of 2023."

I haven't seen any evidence that there were substantial Treasuries sold, I just see MBS on their balance sheet.

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