Re:FDIC Takes over Silicon Valley Bank
by FormerBandmate on Friday March 10, 2023 @12:48PM
(#35098099)
They bought bonds, which tanked when the Fed raised interest rates by 5% in a year. It seemed sane, until now
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Re:FDIC Takes over Silicon Valley Bank
by johngladtj on Friday March 10, 2023 @12:50PM
(#35098122)
The bonds they were legally required to purchase?
Re:FDIC Takes over Silicon Valley Bank
by yeahsure22 on Friday March 10, 2023 @12:55PM
(#35098201)
But they didn’t have to buy THOSE bonds. They bought the wrong bonds.
Re:FDIC Takes over Silicon Valley Bank
by themitigating on Friday March 10, 2023 @01:29PM
(#35098750)
Did they know they were buying the wrong bonds?
Of course, they are bankers, bonds are their daily business.
I think maybe they are not very good at running a bank.
They chose to buy the much riskier bonds to support their very high 4.5% savings yield.
they were offering 4.5%? that explains a lot in terms of their reaching for yield in low quality assets
if they bought short term bills they wouldn't have lost value like the 10 yrs did. So, they made a duration mistake.