So the current CEO lobbied to loosen regulations for smaller banks like SVB. I’m also hearing that SVB hasn’t had a CRO for the past 8-9 months.
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My sister works for a start-up with ALL of their money in this bank - they just got seed money a few months ago. She might not have a job in a few days.
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Ouch, that’s rough
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SVB does seem to be unique in several ways: its concentration of large deposits from one industry, high tech, and its investment strategy that resulted in huge losses when the run on the bank started. Certainly it will be a case study in how not to manage risk.
The bank run is something that a lot of banks would have problems with if people lose confidence. There is no reason to be personally concerned if your deposits are insured though. Companies have a more difficult problem though as their deposits will not generally fit under the insurance limit.
SVB is impacting the UK as well.
Same issue as NA posted. The tech start ups use the bank to pay wages to their employees. The UK arm of SVB has collapsed and is taking down a whole bunch of tech start-ups with it on the ground.
Talk about concentration risk (not a peep from regulator)
The Chancellor (our Sec Treasury) is bailing out the tech companies with emergency cash as they are weeks away from insolvency.
He is definitely going to let SVB UK fail though. He would get crucified politically if he bailed them out during a cost of living crisis.
The deeper I read into this story on the UK side the more bizarre it gets.
They sold a large amount of MBS to get an extra 0.4% of yield (instead of holding till maturity).
Given they had no CRO, who signed off on this?
My bad, thought it would pan out 
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Heh 
It looks like “light touch” regulation works…until it doesn’t.
No surprises there given they apparently did not do any serious stress testing.
Lost count of the times we have been asked by the PRA to do a whole panoply of IR stresses on our back-book (its a lot of work but its done to avoid precisely what happened to SVB).
And these cowboys don’t even have to bother.
Sigh.
Not as interested in the political angle of this piece, but rather more detail on SVB lobbying for deregulation as mentioned earlier:
“This was a 100 percent avoidable problem,” economist Dean Baker told The Intercept in an email, pointing to the Dodd-Frank repeal bill. “That bill raised the asset threshold above which banks have to undergo stress tests from $50 billion to $250 billion. SVB would have been required to undergo regular stress tests before the revision; among the stresses you look at are sharp rises in interest rates, which is apparently what did in SVB. Presumably, if its books had been subject to this test, the risk would have been detected and they would have been required to raise more capital and/or shed deposits"
Seems particularly effed up to me that if you manage to get yourself named exempt from stress testing that you just ignore the risk of a sharp rise in interest rates.
I’m leaning towards bailing out some of the tech companies that might have difficulty making payroll, but the bank itself deserves to fail.
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Another ringing success for deregulation.
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The bank run at SVB happened largely because many high tech firms needed to access their deposits at the same time because of financial stresses in that industry and then fear spread as the deposits were large and thus uninsured. A bank run is less likely with other banks as most of those depositors are insured and so less likely to panic. SVB problem was it was too highly concentrated in one industry and its investments were poorly matched with its liabilities.
We’ve got it all wrong here. SVB’s problem was that it was a “woke” bank.
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Giannis is a better risk manager than the folks at SVB.
Canada only has C$100K of bank deposit insurance and very few big banks. It can be a challenge for someone to spread, say, $1 million in GIC’s around the banks. Treasury bills start looking attractive.
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Article did say it was a preplanned sale, so the sale itself isn’t what I’d call an issue. It does raise the question about did the knowledge of a preplanned sale change the timing of the announcement that drove the run.
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That is tough but a bailout is unlikely per Yellen.
Depositors should eventually get back some percentage of their uninsured deposits and they usually get advances in these situations to help them with their cash flow.
Also preplanned, but SVB paid annual bonuses hours before the bank was seized:
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If only they’d hired more white people this wouldn’t have happened!
Also, you can peruse the board of directors here: Executive Team and Board of Directors | SVB | Silicon Valley Bank