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citiboy
Topic Author
Posts: 7
Joined: January 12th, 2011, 5:28 pm

### Why couldn't SVB repo out the treasuries?

Why couldn't SVB borrow against the treasuries they had, and had to sell them instead, crystalizing the MtM loss? What was the limitation they faced?

Gamal
Posts: 1120
Joined: February 26th, 2004, 8:41 am

### Re: Why couldn't SVB repo out the treasuries?

Get woke, go broke. Jay Ersapah is a politically correct idiot and idiots alway lose money.

bearish
Posts: 5049
Joined: February 3rd, 2011, 2:19 pm

### Re: Why couldn't SVB repo out the treasuries?

Disregarding the noise in this thread, repo’ing held-to-maturity securities for the purpose of meeting a coordinated (thank you, Peter Thiel!) flood of deposit withdrawals is a rather temporary solution. I believe they went with FHLB advances instead, but that’s also a short term thing. Given the makeup of their investment portfolio, once the run started they were toast. We shall see whether CS can do better.

Marsden
Posts: 344
Joined: August 20th, 2001, 5:42 pm
Location: Maryland

### Re: Why couldn't SVB repo out the treasuries?

Get woke, go broke. Jay Ersapah is a politically correct idiot and idiots alway lose money.
Right: blame the Asian-lesbian head of risk management at the $8 billion UK subsidiary for the collapse of a$175 billion bank.

Who's an idiot?

Marsden
Posts: 344
Joined: August 20th, 2001, 5:42 pm
Location: Maryland

### Re: Why couldn't SVB repo out the treasuries?

Why couldn't SVB borrow against the treasuries they had, and had to sell them instead, crystalizing the MtM loss? What was the limitation they faced?
That would at best be a coat of paint over a gaping crack in the wall. And as deposits are withdrawn in a run, they just get further and further upside down.

The original sin, from where I sit, is accounting for debt at book value, which apparently is what counts for reserve requirements for American banks. Everything else being equal, this doesn't have to be a big deal: yes, your profitability and maybe your competitiveness is impaired while your debt holdings are effectively earning you way less than market interest rates, but eventually the debt matures and you're back on your feet.

But if depositors run on the bank, suddenly you have to recognize your losses completely and immediately.

It was stupid of SVB to get so far out over their skis, but absent clever people on social media hyping their problems, they'd probably have weathered it.

If reserves had to be accounted for at something approaching market value, I would expect that SVB would have felt forced to address the problem earlier, when it was not such a big problem.

Gamal
Posts: 1120
Joined: February 26th, 2004, 8:41 am

### Re: Why couldn't SVB repo out the treasuries?

The more I know about SVB the more I think that Jay Ersapah was just a scapegoat. Of course she/he/whatever is a politically correct loser and losers gonna lose but I don't think she/he/whatever was the decision maker for the ALM. On the other hand - who is a better scapegoat than an ambicious 'queer person of color and a first generation immigrant from a working class background'?

Marsden
Posts: 344
Joined: August 20th, 2001, 5:42 pm
Location: Maryland

### Re: Why couldn't SVB repo out the treasuries?

The more I know about SVB the more I think that Jay Ersapah was just a scapegoat. Of course she/he/whatever is a politically correct loser and losers gonna lose but I don't think she/he/whatever was the decision maker for the ALM. On the other hand - who is a better scapegoat than an ambicious 'queer person of color and a first generation immigrant from a working class background'?
Ya think -- ?

And -- gosh -- what sort of people would scapegoat "an ambicious (sic) 'queer person of color and a first generation immigrant from a working class background'?"

I mean, there's you obviously -- losers gonna lose -- but I mean more generally.

Among non-idiots the fact that the main bank had no head of risk management from April to December last year might seem a little more relevant to their problems than the brown-skinned lesbian in the foreign subsidiary.

But, losers gonna lose.

Gamal
Posts: 1120
Joined: February 26th, 2004, 8:41 am

### Re: Why couldn't SVB repo out the treasuries?

Sure.I was once the CRO of a bank that had not had a CRO for a few months before. I had to raise the company from the ashes.

Marsden
Posts: 344
Joined: August 20th, 2001, 5:42 pm
Location: Maryland

### Re: Why couldn't SVB repo out the treasuries?

Were any brown-skinned homosexuals thrown under the bus during this rescue?

Or do you try to keep business separate from pleasure?

Gamal
Posts: 1120
Joined: February 26th, 2004, 8:41 am

### Re: Why couldn't SVB repo out the treasuries?

keep business separate not only from pleasure but above all from missions from God (or anyone else). I may hire environmentalists, activists from the right or the left, vegans, animal or minority right defenders, religious or antireligious maniacs as long as I know nothing about it https://forum.wilmott.com/viewtopic.php?f=16&t=101834#p846693

There's even a joke:
- I am fighting homophobia. 10% of my employees are homosexual. How about your company?
- I don't know.

On the other hand this is California. Being a 'queer person of color and a first generation immigrant from a working class background' is like being muslim in Saudi Arabia. Simply survival instinct.