Name:   MartiniMan - Subject:   Understanding the SVB debacle Date:   3/15/2023 12:27:54 PM (updated 3/15/2023 12:35:38 PM)

As I pointed out below in response to Goofy's ill-considered post, the approach taken by SVB on their bonds is endemic in the banking industry.  See the post from the FDIC.  While SVB was investing in risky mortgages due to their dedication to ESG that caused Moody's to threaten the downgrade and forced them to sell bonds that were underwater.  When they did this it caused the run on the bank.  But at the end of the day their having so much in long-term bonds is not unique to them.  What is unique is that a bank making bad investments based on faulty virtue signaling while gifting almost $74M to BLM among other woke donations (committed $5B to support a "healthier planet", whatever the heck that means) had to sell their bonds at a loss.  In the case of SVB he bonds are not the cause, they are the symptom of woke and broke.

And of course the real cause of all this is the inflation created by Democrats in general and Brandon in particular due to their fiscal insanity forcing the Fed to raise rates and crush the value of bonds.  SVB sold $20B in bonds at a $1.8B loss.  Well run banks that are not making stupid investments decisions will be fine.  The bonds will mature and they will get their principal back.  Of course it will not be helpful to have bonds paying 1% while interest rates are much higher but as the Fed tames inflation, if they can, and rates go down the unrealized losses will be lessened.