Kara Swisher talks to the congresswoman about whiteboarding CEOs and regulators’ failure to rein in SVB’s risky behavior.
I mean, the job of the federal regulators is not to say, “You know, there might be a problem here if you drive that airplane off the end of the runway.” It is to put rules in place so that it doesn’t happen. So for the Fed to now say, “Yeah, we knew,” I think just begs the question, well, what did you do with that knowledge? Because the job of the Fed is not to say, later on, “We told you so.” That’s the job of politicians. The job of the regulators was to do something about it.
And they invested in these safe but long-term securities and they had a mismatch when people wanted their money today. Right? And so one of the things that stress tests do for banks is imagine scenarios like that. What if the interest rates went up faster? What if there was a rapid rise in increase? Would you still have enough liquidity? Because it’s a known fact that when interest rates go up, the price of bonds go down. This is a known fact.
Capital holding requirements mean that if you make a mistake and you guess wrong on the risk, you have a little more cushion to cover your ass, and this law removed that. The lack of regulation here didn’t cause the run. The lack of regulation is the cause of the failure.Sure. But this run was unusual. $42 billion in a single day. And in this particular case, the concentration of the bank in the technology sector, which was also declining. There were layoffs.
So yes, I think that was a big contributor here. I don’t think it’s limited to this community, but this is a, you know, by definition this is an online community. I do think that the folks who said, “Stay calm, keep your money there, it’s gonna be okay. We have confidence in the bank.” — because this was a banking failure where the loans were pretty good and the assets were U.S. treasuries. Right. The problem here was the mismatch on that, which does make me a little surprised, frankly.
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