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Comment by 0zemp2c | Hacker News Reader

Amusing that people are fleeing to BofA, JPM, Wells Fargo as if they are safe

How many DOA car loans is BofA sitting on? How many 2.7% mortgages did WF underwrite? How much dead commercial RE is backed by JPM?

And they ALL bought US Treasuries yielding nothing

Go look at top banks by % of uninsured deposits...I believe First Republic is #10, way down the list

SVB was only guilty of being small

When landlords really start bailing on commercial RE, you will see a major bank implode, only a matter of time. Or, the car loan bubble pops first.

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>SVB was only guilty of being small

No, SVB was guilty of having extremely coordinated risk: All their depositors had basically identical risk profiles, being cash rich, profit seeking VC funded companies that could easily move that cash around and had the same cohort of friends and networking buddies that whatever one did, the others would be sure to follow.

They are also guilty of being straight up negligent with regards to hedging their risks in terms of interest rates changing, and didn't even diversify their treasury portfolio. It's insanely stupid, like first year econ level stuff. Most people understand the downside risk to locking up your money for several years the first time they learn about CDs.

Little appreciated facts that IMHO were the fundamental drivers

a) CEO of SVB was on the Board of Govs of SF Fed Reserve, the entity that is supposed to supervise and regulate banks b) He had earlier lobbied Congress to relax stress test requirements so the SVB would be in the exempt group.

So when you have a bank regulator (SF Fed board member) lobbying Congress to deregulate his own bank (so much to unpack here) does the rest really matter? It would only be a matter of time before the proverbial shtuff hit the fan.

While technically true your first statement is very misleading.

The SF Fed has a nine-member board. Three members are appointed by the Board of Governors of the Federal Reserve System, who in turn are appointed by the president and confirmed by Congress.

The remaining six members are elected by banks.

You can certainly make the case that banks should have less influence over the fed. But this isn't at all unique to SVB.

See https://www.frbsf.org/our-district/governance/boards-directo...

They are “safe” bc whatever happens they will be backstopped by the government not bc people expect some amazing governance there. Also these banks are stress tested regularly

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