Re:Startups that use Silicon Valley Bank are freaking out ov...
by s1artibartfast on Saturday March 11, 2023 @10:39AM
(#35109158)
It is unclear if any other bank could have handled it either.
It took two factors.
3x the money you bank in 2021 specifically
Have well networked clients that carry out a bank run together.
Re:Startups that use Silicon Valley Bank are freaking out ov...
by skeeter2020 on Saturday March 11, 2023 @11:27AM
(#35109753)
Three things I can see:
1. way more deposits than they historically managed, with no-where good to put it.
2. failure to do what banks do, which is arbitrage their position, putting a huge amount into long-term low interest bonds
3. looking for loopholes in liquidity & stress tests, and reporting exemptions that might have raised earlier alarms
#3 is inexecusable but the other points are in the "bad at your job" category.
Do you know why couldn't they handle it? Banks usually have to manage their Credit, Interest Rate, Liquidity, Price, Foreign Exchange, Transaction, Compliance, Strategic and Reputation. So I wonder whether SVB just wasn't sophisticated enough to handle these risks.
If they're the 16th largest bank in the US, it seems to me that they should have had the chops to "handle" large amounts of cash...