Hacker News Reader

Comment by corbulo | Hacker News Reader

Well, the situation was created by the government (fed raising rates). I don't see it as hypocritically as you do.

SVB is kindling a bank run right now.

https://nypost.com/2023/03/10/nypd-called-to-silicon-valley-...

The situation was triggered by the government's rate change, but not really caused by it. The government did a normal fiscal policy action and effectively set off a land mine that SVB had set up for itself and its depositors.

The situation was created by SVB irresponsibly locking most of their money into 10-year mortgage-backed securities a couple of years ago when interest rates were historically low, plus the affected startups irresponsibly locking most of their cash into a single bank that took such irresponsible actions, without that one bank being systemically too-big-to-fail from a nationwide policy perspective.

Expecting the government to keep interest rates historically low for another decade or else to bail the bank out is an unreasonable expectation on the part of SVB and the ecosystem that over-relied on it, not the fault of the government.

You could argue that ending zirp isn't a normal policy action because zirp itself was totally abnormal and crazy. There's also the issue that svb did these things due to the massive flow of money into tech caused by the lockdowns combined with money printing that went with them, also abnormal.

Simply because SVB should have planned for it doesn't absolve the fed of its role. Its a single incredibly powerful decision maker. The fed is notoriously difficult to anticipate.

If someone is being reckless with fireworks right before the Enola Gay flies overhead and drops Little Boy its clear who did the killing.

Notoriously difficult to anticipate???

Stanning for SVB when every single media outlet and signal from the Fed at the time of the purchases of those bonds was that there would be increasing rates for the forseeable future. My mom saw it coming, everyone who was thinking of buying a house saw it coming, damn near everyone on the planet saw it coming.

Other banks were not sitting with +40% of their assets in 10yr term low interest securities... try more like 25%

If you can predict what the fed is gonna do when its gonna do it you should be incredibly rich with that information.

If it was caused by the government why wouldn't other banks be experiencing the same issues SVB are?

I didnt say its the sole variable. Just the prime mover of the change. SVB obviously had an elevated risk profile.

The FED isn’t quite the government. If the government controlled monetary policy directly things would be way, way worse.

Indeed. The situation was caused by a combination of the reckless investing that SVB did, the FED failing to raise interest rates earlier, and irresponsible amounts of government spending.

Reply on news.ycombinator.com