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A comment on Yellen says government will help SVB depositors but rules out bailout. Parent comment

Re:Yellen says government will help SVB depositors but rules... by JJMcJ on Sunday March 12, 2023 @11:34AM (#35121294)
It wasn't risky as long as prime rate stayed super low.

But that rate has been creeping up for months now.

SVB was too small to qualify for risk assessment under the revised banking rules. So they could get away with money in volatile securities that were very interest rate sensitive.

That said, SVB seemed very solid until Thursday morning.

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Re:Yellen says government will help SVB depositors but rules... by Cthulhu_ on Sunday March 12, 2023 @11:40AM (#35121388)
Would it have been better if the rate increases were further apart and there were strong declarations of intent?
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Re:Yellen says government will help SVB depositors but rules... by chiefalchemist on Sunday March 12, 2023 @11:41AM (#35121395)
To clarify, SVB's problems are the result of The Fed's change in direction. It just takes a while to see the affects of those decisions.
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Re:Yellen says government will help SVB depositors but rules... by salawat on Sunday March 12, 2023 @01:14PM (#35122894)
SVB's problems were the result of glutting on long maturation bonds instead of bills.
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Re:Yellen says government will help SVB depositors but rules... by chiefalchemist on Sunday March 12, 2023 @07:12PM (#35127863)
As it was explained to me, the Fed increasing interest rates impacted the value of the bonds held by SVB. As that value contracted SVBs was eventually in trouble.
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Re:Yellen says government will help SVB depositors but rules... by tome on Sunday March 12, 2023 @11:56AM (#35121647)
> It wasn't risky as long as prime rate stayed super low.

That sounds a bit like "it's not risky to driver a motor vehicle as long as you don't get into an accident".

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Re:Yellen says government will help SVB depositors but rules... by JJMcJ on Sunday March 12, 2023 @01:10PM (#35122825)
That's true. The real risk was in imagining that the interest rates would stay super-low forever.
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Re:Yellen says government will help SVB depositors but rules... by salawat on Sunday March 12, 2023 @01:13PM (#35122877)
Only because people weren't asking the right questions.

It's like driving into a parking structure and seeing exposed rebar. It might still be standing now; but if you're smart, you need to find somewhere else to park.

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