LogFAQs > #972149492

LurkerFAQs, Active DB, DB1, DB2, DB3, DB4, DB5, DB6, DB7, DB8, DB9, DB10, Database 11 ( 12.2022-11.2023 ), DB12, Clear

Topic List	Page List: 1
Topic	Politics Containment Topic 402: This Election Sucks and is Now About Trains
Samurai7 03/13/23 4:58:44 PM #147:	Peace___Frog posted... Prior to 2018, banks were required to manage risk in a certain way for portfolios over $50B. After 2018, this threshold was increased to $250B after significant lobbying from the bank industry. SVB was above the 50 but below the 250, so they were legally allowed to take shortcuts that made this more likely to happen. Additionally, banks are expected to, you know, manage risks. Especially the kind that can be planned for, such as a change in interest rates. Most banks do this as just a matter of day to day work. It would be like forgetting that you have an essay due because you didn't read the syllabus, and the teacher only mentioned it in class once. And finally, the bonds that they purchased were long term assets. They had the luxury of living large the last few years because all of their clients were depositing significant money and not taking significant money out. So they got greedy and wanted to get more future dollars. They were fundamentally mismanaged because they had a poor allocation of assets and cash flow. Their risk management position was only filled in January and had been vacant for nine months. Also the invested almost entirely in bonds which lose value as interest increases. If they had a qualified risk management employee they would've avoided this easily with better diversification. If you have 30 minutes and are really interested I recommend watching Patrick Boyle's take on it as he seems very thorough to me. https://youtu.be/GdfYnqyu7v8 --- Conformity and rebellion...both ways are simple-minded--they are only for people who cannot cope with contradiction and ambiguity. <cite>Samurai7 posted [p:972149492] in Politics C... [t:80360353]...</cite> <quote>Peace___Frog posted... </cite><quote>Prior to 2018, banks were required to manage risk in a certain way for portfolios over $50B. After 2018, this threshold was increased to $250B after significant lobbying from the bank industry. SVB was above the 50 but below the 250, so they were legally allowed to take shortcuts that made this more likely to happen. Additionally, banks are expected to, you know, manage risks. Especially the kind that can be planned for, such as a change in interest rates. Most banks do this as just a matter of day to day work. It would be like forgetting that you have an essay due because you didn't read the syllabus, and the teacher only mentioned it in class once. And finally, the bonds that they purchased were long term assets. They had the luxury of living large the last few years because all of their clients were depositing significant money and not taking significant money out. So they got greedy and wanted to get more future dollars. They were fundamentally mismanaged because they had a poor allocation of assets and cash flow.</quote>Their risk management position was only filled in January and had been vacant for nine months. Also the invested almost entirely in bonds which lose value as interest increases. If they had a qualified risk management employee they would've avoided this easily with better diversification. If you have 30 minutes and are really interested I recommend watching Patrick Boyle's take on it as he seems very thorough to me. https://youtu.be/GdfYnqyu7v8 --- Conformity and rebellion...both ways are simple-minded--they are only for people who cannot cope with contradiction and ambiguity.</quote> ... Copied to Clipboard!
Topic List	Page List: 1