[basseq]

I'm unclear how SVB management "made out like bandits". I assume they had a couple good years of nice salaries and bonuses, but now their equity is zero'd and they're out of a job. I presume they would have preferred to continue managing the bank as a going concern.

[jjoonathan]

They chose to invest in those 10 year securities, proverbial pennies in front of the steamroller. I'm sure this was framed as a smart move at the time and they gave themselves big bonuses while investors were out to lunch. Ultimate responsibility does lie with investors, but management definitely hustled them and got away with it.

[basseq]

I guess my point is that they still got hit by the steamroller: they lost their jobs and future earnings, they lost any equity (which certainly was part of aforementioned bonus), etc.

Earning a nice bonus last year is a reasonable consolation prize, but I'd wager most execs would rather have had a lower bonus and the ability to continue to manage an operational bank through 2023.

[cronix]

They cashed in millions in stock just before they announced they needed to raise $2B in capital to offset losses on their bond sales, which led to a crash, on top of their bonuses. If that's getting hit with a steamroller, sign me up.

[digitaltrees]

So far as I have seen, every equity sale was part of standard, pre-cleared and disclosed plans. And all those executives had significantly more equity they probably would have loved to sell but couldn't.

[lmm]

> every equity sale was part of standard, pre-cleared and disclosed plans

Not really. They were sold 1 month after the 10-Qs were filed, which is shorter than the holding period most reputable banks require for their executives, and the 1O-Qs had only that one sale in them.

[basseq]

My point in all this is that the FDIC's actions to guarantee the deposits did not benefit bank management.

They may have "made out like bandits" in taking advantage of equity holders, and perhaps without duty of care to depositors... but all that is true regardless of the subsequent actions. They did not "make out like bandits" because of the Government's actions. And I think that's important, given the criticism levied against the "bailout".

[kristjansson]

Interestingly, that second part appears to be true only for the CEO, who's lost ~$30m. Other executives (at least the ones on NASDAQ's insider transactions list) were holding only a few thousand shares at most.

[jjoonathan]

No, the investors got hit by the steamroller. Management, who knew exactly what they were doing, did not lose their earnings. Future earnings? Some of these were Lehman execs -- their ability to land a position in SVB is proof that they probably did not sacrifice future earnings.

> Earning a nice bonus last year

Why do you think this was limited to last year? I suspect they made risky moves again and again and again and got paid out again and again and again.

[digitaltrees]

This is so out of touch with the reality of people. No one is knowingly taking risk that will bankrupt their company for a few million dollars in bonus when they can instead have a 10 or 20 year career where even 25% of that bonus with accrue to much more value. Further, their bonus were stock, and every single executive at SVB lost most of their equity which was paid over years and locked up as options.

Edit: after reading this article posted by lordfrito below I stand corrected. SVB executives knew the risk and took it anyway. But not for personal gain but to maximize firm value as it allowed higher profit which increased the valuation (so yes they benefited personally, but to a greater extent than just a few million in bonuses).

https://www.bloomberg.com/news/articles/2023-03-13/svb-failu...

[SkyMarshal]

It’s probably a reference to reports of some SVB execs selling their stocks in the weeks before the failure.

[basseq]

Ah, likely. Though it doesn't seem like there's any evidence yet on insider trading or execs fully cashing out. They got lucky liquidating some single-digit % of their holdings, but still likely lost most. A 95% loss is better than a 100% loss, but still not "making out like a bandit".