Excuse me a moment: aren't some of us forgetting something when it comes to blaming the SVB failure on the bank's failure to cope with the sudden drop in bond-holdings' value due to one or more Fed increases in the basic intererst rate? _All_ banks faced this "problem" of recently less-valuable bond portfolios. So what? They didn't all f…
Excuse me a moment: aren't some of us forgetting something when it comes to blaming the SVB failure on the bank's failure to cope with the sudden drop in bond-holdings' value due to one or more Fed increases in the basic intererst rate?
_All_ banks faced this "problem" of recently less-valuable bond portfolios. So what? They didn't all fold like a house of cards.
What distinguishes SVB--apart from its remarkably stupid management and board of directors generally--is that the banks' business was very heavily focused on _"Tech Start-Up"_ lending --and it is hardly a secret that this sector is extremely susceptible to sudden and wild swings-- it's sort of in its "DNA". Tech-Start-Ups are the Cloud Cuckoo land of investment and banking--and that is why they are usually financed by deep-pocketed venture-capitalists and hedge-funds, not consumer banks holding many thousands of ordinary families' financial affairs.
Had SVB spent more time diversifying its lending portfolio's _industry_ profile than its employees' racial, sexual or ethic diversity, the slump in tech start-ups should not have doomed it as it did.
This is truly a case of hubris à la "Long Term Capital Mangement, Inc." --- when "genius" went "nuts".
Excuse me a moment: aren't some of us forgetting something when it comes to blaming the SVB failure on the bank's failure to cope with the sudden drop in bond-holdings' value due to one or more Fed increases in the basic intererst rate?
_All_ banks faced this "problem" of recently less-valuable bond portfolios. So what? They didn't all fold like a house of cards.
What distinguishes SVB--apart from its remarkably stupid management and board of directors generally--is that the banks' business was very heavily focused on _"Tech Start-Up"_ lending --and it is hardly a secret that this sector is extremely susceptible to sudden and wild swings-- it's sort of in its "DNA". Tech-Start-Ups are the Cloud Cuckoo land of investment and banking--and that is why they are usually financed by deep-pocketed venture-capitalists and hedge-funds, not consumer banks holding many thousands of ordinary families' financial affairs.
Had SVB spent more time diversifying its lending portfolio's _industry_ profile than its employees' racial, sexual or ethic diversity, the slump in tech start-ups should not have doomed it as it did.
This is truly a case of hubris à la "Long Term Capital Mangement, Inc." --- when "genius" went "nuts".