SVB's Risk Model Change Raises Eyebrows Amidst Bank Collapse and Junk Debt Unloading Efforts.
TL;DR Summary
Executives at Silicon Valley Bank changed the bank's risk model assumptions to validate a profit-driven strategy, despite internal warnings that higher interest rates could jeopardize future earnings. The new assumptions were misplaced, and the bank was forced to raise additional cash by selling securities at a $1.8 billion loss, leading to one of the biggest bank runs in U.S. history. The episode shows an appetite for risk that set the stage for SVB's stunning meltdown, and regulators are reviewing the bank's "textbook case of mismanagement."
Topics:business#bank-failure#executive-misconduct#finance#interest-rates#risk-management#silicon-valley-bank
- Silicon Valley Bank's risk model flashed red. So its executives changed it. The Washington Post
- SVB Collapse Complicates Banks' Efforts to Unload More Than $25 Billion of Junk Debt The Wall Street Journal
- SVB (SIVB) Bank Collapse Stunned Even the One Analyst With Sell Rating Bloomberg
- Why so many banks seem to fail on Fridays CNN
- Ackman's Win Streak Cools as Rates Pull Back The Wall Street Journal
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