Fraud in the ordinary sense is also unlikely to be involved. The Silicon Valley Bank fell prey to a poor loan strategy that picked investments -- US Treasury bonds -- that are utterly safe as to repayment but were at risk due to their locked in low interest rates. In effect, the bank was losing money due to the way that its Treasuries fell in value due to inflation.
Although regulators may be fended off with a so-called hold to maturity valuation for Treasuries, markets and depositors know better because they can do the math and see that the liability side of the bank's balance sheet -- deposits -- was becoming greater than the declining actual market value of its assets in the form of low interest loans to the US government.
When that happens and the thin cushion of shareholder capital and reserves is inadequate, a bank technically becomes insolvent. Share prices collapse and large depositors rush to get their money out, which soon makes a forced sale under FDIC auspices or a liquidation inevitable.
There is a larger issue that so far seems to have escaped comment. Go to the bank's website and have a good laugh at their ESG goals and utter wokeness. The Silicon Valley Bank would have been far better off without that kind of trendy codswallop and instead have put cautious, traditional bankers in charge. They would have recognized US Treasuries as a bad investment due to rising inflation and interest rate risk.
One does not even need a green eye shade and wear dull suits and sensible lace up shoes to see that, but you do have to ignore woke nonsense and see things as they are. The big, big fraud that is going on is the way that the inflation spurred by Joe Biden and the Democrats is eating up the value of low interest loans to the US government.
“Go to the bank’s website and have a good laugh at their ESG goals and utter wokeness.”
Wokeness/virtue signaling is a great way to hide criminal fraud.
Key officers dumped their stock in the last couple of weeks.