“SVB held a lot of Treasury bonds, percentage-wise more than most other banks. This is because they had a lot of startups depositing a lot of venture capital funding, they needed somewhere to invest it, and Treasury bonds were one of the few investment options that were in regulatory compliance and available in large amounts.
When the Federal Reserve started rapidly increasing interest rates, this tanked the value of Treasury bonds. And “tanked” is no exaggeration; there are grim charts from the beginning of this year like [ABOVE] and back in November 2022 we had the Chairman of the FDIC warning that these unrealized losses could very quickly become actual losses for a bank that needed to increase liquidity.
Which is precisely what happened to SVB, down to the letter.”

Sentiment

She was the “Head of Financial Risk Management & Model Risk”
🐻🐻🐻

who’s ready for monday?