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Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

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Latest Memo from Howard Marks Oaktree Capital: Lessons from SVB Collapse

Sometimes it's better for me to read things written in plain English.

Lessons from Silicon Valley Bank

Comments

  • A good review, but even Marks missed one important aspect.

    Many banks, including SVB and Signature, initially had their Treasuries as AWS (available-for-sale). But in the initial phases of Fed rate hikes, when there were talks of inflation being transitory, most moved Treasuries from AWS to HTM (hold-to-maturity) to reduce hits to their earnings and balance sheets. THAT compounded the problem. It isn't easy to shift back from HTM. But as the Fed continued relentlessly with the rate hikes (and transitory inflation was only in the rearview mirror), banks were really stuck with these hugely underwater securities that anyone could see.

    The rest of the review is just fine.
  • edited April 2023
    “Never forget the six-foot-tall person who drowned crossing the stream that was five feet deep on average.”

    Yup. Good ol’ Howard Marks
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