A few observations: 1) Risk management was lax with SVB. SVB did not appropriately plan liquidity in the event of interest rate increases, thus ran out of cash. 2) I disagree on the bailout of deposits over the $250,000 FDIC insured limit. That limit and risk is well advertised. If you went above the known limit, my sympathy is limited. …
1) Risk management was lax with SVB. SVB did not appropriately plan liquidity in the event of interest rate increases, thus ran out of cash.
2) I disagree on the bailout of deposits over the $250,000 FDIC insured limit. That limit and risk is well advertised. If you went above the known limit, my sympathy is limited. If 10 additional banks fail, is the government going to cover all deposits above $250k in those banks as well? If 100 banks fail? It’s a bad precedent and rewards irresponsible behavior.
3) Top executives from SVB cashed out a lot of their SVB stock a month or so before the run on the bank. Is that just a coincidence? It gives the appearance they knew things were going badly.
A few observations:
1) Risk management was lax with SVB. SVB did not appropriately plan liquidity in the event of interest rate increases, thus ran out of cash.
2) I disagree on the bailout of deposits over the $250,000 FDIC insured limit. That limit and risk is well advertised. If you went above the known limit, my sympathy is limited. If 10 additional banks fail, is the government going to cover all deposits above $250k in those banks as well? If 100 banks fail? It’s a bad precedent and rewards irresponsible behavior.
3) Top executives from SVB cashed out a lot of their SVB stock a month or so before the run on the bank. Is that just a coincidence? It gives the appearance they knew things were going badly.