Using borrowed money for venture capital seems very risky and not something that a bank should be celebrated for enabling.
Using borrowed money for venture capital seems very risky and not something that a bank should be celebrated for enabling.
It made bad bets on bonds and lost $2 billion dollars of the $200+ billion dollars it held in deposits.
I must be missing something, because I fail to see how this is such a big deal, or why anyone will be taking much of a haircut on their deposits.
Selling it all, today, would mean that they get back far less than the total deposits.
Selling it over time or parking it with a temp bad bank would be fine though and that is what fdic will probably do.
I do feel the svb ceo/cfo etc should face consequences for their actions, bonuses should be clawed back, but really those are not the important actions here - providing stability to the entire banking system and making sure hundreds of businesses do not close at once because of a bank run are far more important. Otherwise there is significant systemic risk.
The unrealized loses were a further 16Billion+.
18Billion lost of a capital base of 200Billion is clearly a big deal.