The banking sector has been hammered by the failure of Silicon Valley Bank. But the bank had money stashed into what's supposed to be the safest asset around. What happened?TIMOTHY A. CLARY/AFP via Getty Images
"Silicon Valley Bank was just flush," he says."Its deposit base tripled between 2020 and 2022, with billions and billions of dollars flowing in." At the end of that time, the government will pay you back for that loan, plus a little interest. US bonds are considered to be the safest investment on the planet. The U.S. always pays back its debts. They are often called a riskless asset.
"Basically what happened was Silicon Valley Bank wanted a bigger payout," says Alexis Leondis, who writes about bonds for Bloomberg."So they basically wanted to reach for longer term bonds, because, I think, they felt like what they would get from shorter term bonds was kind of a joke."Silicon Valley Bank locked billions of dollars away into 10 year bonds. But there were risks it wasn't seeing.Those billions were now locked up for years.
Banksters are the cause of bank failures Corruption and incompetence and crimality
No, this is NOT TRUE. This is embarrassingly wrong. SVB did not collapse because there is no market for treasury notes. NOT IN ANY WAY.
Because Joe Biden chose to turn US bonds into shit.
The important thing is average Americans will be called upon to rescue billionaires and cover their loses.
Our reckless Fed with their unprecedented raising of rates did more damage than good. It always hits the top first then rolls down hill. They only did it do recoup cost of the pandemic, and it will effect everyone, top to bottom. You don't fix an economy by tying it down.
.GavinNewsom
Well let's not forget the role of Trump supporter and 'Libertarian' PeterThiel in speeding up the demise of SVB just before it crashed only to be rescued during a massive crisis response by the Fed, Biden Admin, and FDIC.
Idiots
Reminds me of this...
Why is NPR carrying so much water for the tech-bro bank failure?
Then the Fed Chairman raised interest rates. Super safe fail.
Aren't these the dudes (it's nearly always dudes) that tell us they are smarter than all of us, don't need regulation & deserve massive bonus's and special tax treatment (CI)?
“WhO rEaLlY nEeDs RiSk MaNaGeMeNt?”
The only reason they were risky is that they were using them as liquid assets, which they kind of are in a zero interest environment. But when interest rates on new bonds rise, these new bonds are more valuable than the old bonds so you can only resell at a discount. Thus losses.
It’s inexcusable for a bank not take interest rise in their decision making.
Super safe but of ever decreasing value with the rise in interest rates
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