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Regulatory And Policy Failures Made SVB A Grenade
By now (where in this case "by now" means barely four days after everybody woke up to the problem), the tale of SVB's collapse is well understood.
As far as definitive postmortems of financial catastrophes go, this one was conducted and agreed very swiftly, commensurate with the rapidity of the bank's implosion.
It was a remarkably simple story, but a few days on, some of the nuance is becoming clear, and I think a few things are worth a mention. Readers will doubtlessly agree.
In retrospect
Stupid players needed this lesson. They need it every few years. Magic money and unicorns and crypto and make believe will work until they don’t work.
… evidently at least every 15 years (early 1990s, ~2008, ~2023)
Dint forget the dotcom bubble….it’s every 10 yrs!
Why was Steve Mnuchin happy about undermining those important safeguards and regulations?
SBNY is an interesting story too.
Analogous customer profile to SIVB – crypto traders with over 80% of deposits uninsured, who saw SI fail then SIVB fail and took down SBNY in two days.
Not analogous financial management – if you look at the numbers, HTM AFS equity etc, SBNY doesn’t really stand out from regional peers.
Sad end for what used to be a quality bank with solid customers.