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A comment on FDIC Takes over Silicon Valley Bank. Parent comment

Re:FDIC Takes over Silicon Valley Bank by koolba on Friday March 10, 2023 @12:56PM (#35098210)
They had massive asset / liability duration mismatch. That’s gambling on low rates for an extended period of time.

It’d be like a traditional bank not reselling mortgages to Fannie Mae. You can’t have $1B of demand deposit liability and $1B of 10-year treasuries because a rate hike will wipe you out immediately if you need liquidity.

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Re:FDIC Takes over Silicon Valley Bank by borski on Friday March 10, 2023 @01:03PM (#35098326)
Every bank had this, especially during the last two years. They were not the only one. The difference was bad PR and a panic run.
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Re:FDIC Takes over Silicon Valley Bank by hd95489 on Friday March 10, 2023 @01:24PM (#35098670)
If that’s your theory then buy some puts because anyone that did this will absolutely get ripped a new one
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Re:FDIC Takes over Silicon Valley Bank by nostrebored on Friday March 10, 2023 @01:56PM (#35099198)
They won’t in the short term. Even the GFC had a multi year slow roll. Markets can remain irrational longer than you can stay solvent and all that
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Re:FDIC Takes over Silicon Valley Bank by onlyrealcuzzo on Friday March 10, 2023 @01:02PM (#35098308)
Why can't a bank borrow for liquidity so it doesn't need to sell at a discount?
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Re:FDIC Takes over Silicon Valley Bank by lisper on Friday March 10, 2023 @01:06PM (#35098370)
It can, and when rates are low, many do. But interest rates are rising, so borrowing is getting expensive.
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