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2023-03-12 Government Corruption

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Posted by Besoeker 2023-03-12 07:02|| || Front Page|| [15 views ] Top

#1 To be fair to SVB, this is what every bank does. They take short-term deposits (like your checking account, which you can spend from whenever you feel like it) and invest in relatively longer-term assets. This is one of the ways that banks make money.

Managing this risk is the job of two departments: Risk Management (which generally is composed of the most clueless people in the bank) and Treasury(which generally has much sharper and more capable people.) If they fail to manage the risk properly, then...

But again, the fact that SVB did not get loans from the Fed but rather was seized outright by the FDIC makes me think something much more was involved here.

Posted by Tom 2023-03-12 13:45|| 2023-03-12 13:45|| Front Page Top

#2 Risk Management (which generally is composed of the most clueless people in the bank)

LOL -- not only that, but merely having a Risk Management Department implies to the public that Risk is being "Managed", which is a pleasing illusion. Enron had risk managers every ten feet in the building and risk models that would give Einstein a headache.

The Am Thinker articles implies that the FDIC just sits back and reads call reports. There's a very remote chance that's true here, but I've seen situations in which the FDIC had examiners onsite permanently, and one big deal in which regulators attended board meetings and had substantial input. So I'd be interested in seeing how that shakes out here.

Posted by Matt 2023-03-12 15:09|| 2023-03-12 15:09|| Front Page Top

#3 From the FDICs perspective they might not have much focus on a bank like SVB because the FDIC is only really on the hook for 3% of the deposits. This was not a mom and pop operation where the FDIC would be on the hook for 90% of deposits.

Posted by Airandee 2023-03-12 15:40|| 2023-03-12 15:40|| Front Page Top

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