[rogpodge]

Of course, part of the problem is that bank regulations on banks this large should not have been loosened by Trump in 2018.  It is also a black eye for KPMG.

I've seen a bunch of these takes online, including from Stephanie Ruhle, who supported the deregulation at the time. To be clear, SVB was one of the main lobbyists for the stress testing rollback. But would a quarterly stress test have detected SVB's issue? If so, please explain how. 

https://twitter.com/balajis/status/1635228632275877888

My take is that it would not have mattered, and this is just an attempt to find a convenient political scapegoat. The reality is, that Congress passed the largest increase in federal spending on record, which created inflation. The Treasury and the Fed both tried to tell the public that inflation was transitory for a year. Relying on that, SVB (and other banks) bought the "safest" investment possible... 10-year Treasuries. When the Fed finally started raising rates, at the fastest pace ever, those assets became worthless. A liquidity crisis forced SVB to sell what assets it could, but a large amount of 1.25% yielding Treasuries is now worthless and can't be sold. People in Silicon Valley smelled something was up, and that deposits were vulnerable and started a bank run.

https://twitter.com/Nouriel/status/1634925544889540612 

One of these banks' risk management program, as shown by their assets w/ unrealized losses, was not like the others. Also, BAC, what are you doing? 

https://twitter.com/balajis/status/1635223897233829889

Covering up Treasury / Fed malfeasance, and the complete abdication of hedging interest rate risk by smaller banks with this regulation gloss is classic deflection. Do I really care about the deregulation at issue? No. Regulate away. But the reasons for this bank collapse are not because of deregulation, and absolutely because the Treasury Secretary and the Fed Chair told banks that inflation was transitory, and they wouldn't have to raise rates quickly.

CPI comes out tomorrow. We'll see how much wiggle room the Fed has tomorrow.

[rogpodge]

Of course, part of the problem is that bank regulations on banks this large should not have been loosened by Trump in 2018.  It is also a black eye for KPMG.

I've seen a bunch of these takes online, including from Stephanie Ruhle, who supported the deregulation at the time. To be clear, SVB was one of the main lobbyists for the stress testing rollback. But would a quarterly stress test have detected SVB's issue? If so, please explain how. 

https://twitter.com/balajis/status/1635228632275877888

My take is that it would not have mattered, and this is just an attempt to find a convenient political scapegoat. The reality is, that Congress passed the largest increase in federal spending on record, which created inflation. The Treasury and the Fed both tried to tell the public that inflation was transitory for a year. Relying on that, SVB (and other banks) bought the "safest" investment possible... 10-year Treasuries. When the Fed finally started raising rates, at the fastest pace ever, those assets became worthless. A liquidity crisis forced SVB to sell what assets it could, but a large amount of 1.25% yielding Treasuries is now worthless and can't be sold. People in Silicon Valley smelled something was up, and that deposits were vulnerable and started a bank run.

https://twitter.com/Nouriel/status/1634925544889540612 

One of these banks' risk management program, as shown by their assets w/ unrealized losses, was not like the others. Also, BAC, what are you doing? 

https://twitter.com/balajis/status/1635223897233829889

Covering up Treasury / Fed malfeasance, and the complete abdication of hedging interest rate risk by smaller banks with this regulation gloss is classic deflection. Do I really care about the deregulation at issue? No. Regulate away. But the reasons for this bank collapse are not because of deregulation, and absolutely because the Treasury Secretary and the Fed Chair told banks that inflation was transitory, and they wouldn't have to raise rates quickly.

CPI comes out tomorrow. We'll see how much wiggle room the Fed has tomorrow.