It wasn't risky as long as prime rate stayed super low.
But that rate has been creeping up for months now.
SVB was too small to qualify for risk assessment under the revised banking rules. So they could get away with money in volatile securities that were very interest rate sensitive.
That said, SVB seemed very solid until Thursday morning.
Only because people weren't asking the right questions.
It's like driving into a parking structure and seeing exposed rebar. It might still be standing now; but if you're smart, you need to find somewhere else to park.
As it was explained to me, the Fed increasing interest rates impacted the value of the bonds held by SVB. As that value contracted SVBs was eventually in trouble.
But that rate has been creeping up for months now.
SVB was too small to qualify for risk assessment under the revised banking rules. So they could get away with money in volatile securities that were very interest rate sensitive.
That said, SVB seemed very solid until Thursday morning.