[rogpodge]

They do disclose the unrealized loss in footnotes.  But you need to do something with that -- that is the purpose of a stress test, which SVB lobbied to be exempt from and was successful in achieving that in 2018.



Before the regulators took action, the bank announced a sale of holdings at a sizable loss and made a failed attempt to raise additional capital.  That was enough fuel for the tech bros to create a $42B bank run through Slack and other channels on Thursday.

---

I'm not convinced that <that is the purpose of a stress test>.  A stress test relies on what would happen in some artificial worst case scenarios ginned up by the Fed.  As I noted above, the 2022 stress test imagined a bad unemployment scenario, but underestimated inflation and the need to raise interest rates.

https://twitter.com/FrogNews/status/1635393591328792576
https://twitter.com/FrogNews/status/1635394572988866560

Bad source?  How about this?
https://www.federalreserve.gov/publicati...220623.pdf

Explanatory tweets here (look at p34 of the pdf - Bank of America, and p40 - Charles Schwab):
https://twitter.com/TeslaLarry/status/16...6708598786
https://twitter.com/snehalantani/status/...4387622913

This was the point I was trying to make earlier.  The Dodd-Frank stress tests didn't contemplate this scenario and that the 10-year treasuries could not be liquidated (even at a loss) sufficient to handle a bank run.  In fact, the scenario was that the Fed would have to drop interest rates because of a recession.

https://michaelwgreen.substack.com/p/the...of-despair

chrisk isn't Chris Kotowski, is he?

Going off today's 10-year price is cherry-picking off an unprecedented trading day (really last few days) in treasuries.

https://twitter.com/johnauthers/status/1...6777195520
https://twitter.com/johnauthers/status/1...7554421761
https://twitter.com/MillStResearch/statu...5176516608

Why?  Because the bond traders have decided that the Fed would rather print money than fight inflation at this point.  And they're right, because devaluing the currency is always the politically easy thing to do.  Buying worthless assets "at par" may make the worthless assets worth something, but the price is going to be paid by everyone through inflation.

[rogpodge]

They do disclose the unrealized loss in footnotes.  But you need to do something with that -- that is the purpose of a stress test, which SVB lobbied to be exempt from and was successful in achieving that in 2018.



Before the regulators took action, the bank announced a sale of holdings at a sizable loss and made a failed attempt to raise additional capital.  That was enough fuel for the tech bros to create a $42B bank run through Slack and other channels on Thursday.

---

I'm not convinced that <that is the purpose of a stress test>.  A stress test relies on what would happen in some artificial worst case scenarios ginned up by the Fed.  As I noted above, the 2022 stress test imagined a bad unemployment scenario, but underestimated inflation and the need to raise interest rates.

https://twitter.com/FrogNews/status/1635393591328792576
https://twitter.com/FrogNews/status/1635394572988866560

Bad source?  How about this?
https://www.federalreserve.gov/publicati...220623.pdf

Explanatory tweets here (look at p34 of the pdf - Bank of America, and p40 - Charles Schwab):
https://twitter.com/TeslaLarry/status/16...6708598786
https://twitter.com/snehalantani/status/...4387622913

This was the point I was trying to make earlier.  The Dodd-Frank stress tests didn't contemplate this scenario and that the 10-year treasuries could not be liquidated (even at a loss) sufficient to handle a bank run.  In fact, the scenario was that the Fed would have to drop interest rates because of a recession.

https://michaelwgreen.substack.com/p/the...of-despair

chrisk isn't Chris Kotowski, is he?

Going off today's 10-year price is cherry-picking off an unprecedented trading day (really last few days) in treasuries.

https://twitter.com/johnauthers/status/1...6777195520
https://twitter.com/johnauthers/status/1...7554421761
https://twitter.com/MillStResearch/statu...5176516608

Why?  Because the bond traders have decided that the Fed would rather print money than fight inflation at this point.  And they're right, because devaluing the currency is always the politically easy thing to do.  Buying worthless assets "at par" may make the worthless assets worth something, but the price is going to be paid by everyone through inflation.