03/18/2023
Was Silicon Valley Bank a One Off?
In today’s WSJ Opinion, Andy Kessler points out everything SVB did wrong, implying that it was largely a one-off due to bad management, e.g. chasing yields irresponsibly; buying long-term bonds without hedging their interest risk; not anticipating the increase in rates that everyone saw coming; not raising capital soon enough; getting distracted by non-banking issues; being forced to sell bonds/assets at a huge loss to raise capital (the biggest factor), etc.
Do we have all the correct info, who knows. You be the judge.
