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Re:How deep is the rot in America’s banking industry? by digitaltrees on Thursday March 16, 2023 @04:48PM (#35188319)
This wouldn't have been solved by any thing in Dodd-Frank. SVB invested in highly liquid securities that are considered the safest asset class, interest rate risk wasn't expected to materialize as quickly as it did as the Fed would have been expected to raise rates more gradually over a longer time horizon or provide an asset exchange mechanism for member banks. SVB is not an example of a bank that had engaged in Investment Banking activity with depositor capital or had unacceptable capital reserve ratios.

That being said, I could be wrong and not aware of the specific Dodd-Frank policy that, if followed, would have made SVB safer.

The fed doesn't need to lower rates necessarily, it could simply allow all member banks to exchange low interest rate long term bonds for new higher yield bonds and pay the Fed for the spread with a loan. That would reduce the liquidity risk if the member bank needs to sell some or all of its bond portfolio on short notice to fund depositor withdrawals, it would allow the Fed to hold the low rate securities to maturity while being fairly compensated by member banks.

Edit: after reading this article posted by lordfrito below I stand corrected. SVB executives knew the risk and took it anyway. But not for personal gain but to maximize firm value as it allowed higher profit which increased the valuation (so yes they benefited personally, but to a greater extent than just a few million in bonuses).

https://www.bloomberg.com/news/articles/2023-03-13/svb-failu...

Re:How deep is the rot in America’s banking industry? by landemva on Thursday March 16, 2023 @04:57PM (#35188491)
> The fed ... could simply allow all member banks to exchange low interest rate long term bonds for new higher yield bonds and pay the Fed for the spread with a loan.

Maybe we should admit Congress will never repay the national debt and simply have the Fed purchase new federal debt issuance. The current complicated charade just pays banker bonuses.

Re:How deep is the rot in America’s banking industry? by s1artibartfast on Thursday March 16, 2023 @07:14PM (#35190293)
SVB was holding 91 billion dollars of underwater securities. The FED is currently holding 2.7 trillion with a t dollars of underwater securities
Re:How deep is the rot in America’s banking industry? by digitaltrees on Friday March 17, 2023 @02:27AM (#35193885)
They are only underwater if they are forced to sell. Why would the fed be forced to sell?
Re:How deep is the rot in America’s banking industry? by JumpCrisscross on Thursday March 16, 2023 @07:42PM (#35190565)
> wouldn't have been solved by any thing in Dodd-Frank

Duration risk is specifically tested for in larger banks. The stress tests SVB successfully lobbied out of would have saved them.