Silicon Valley Bank acted like a hedge fund, and 'they deserve what they got,' bank analyst says
Banks shouldn't be blamed for the losses in their bond holdings — but Silicon Valley Bank's failure was self-made, according to Chris Whalen, chairman of Whalen Global Advisors., he instead blamed the Federal Reserve for keeping rates low with massive bond purchases, then suddenly raising rates sharply.
It relied on risky bets in a bad year for the tech industry, its core depository group, he said. To offset declines from its tech clients, Whalen said SVB's strategy was to bet on mortgage-backed securities. Meanwhile, he added that most other banks took the appropriate course of action, purchasing risk-free securities, but were later undermined by the Fed.
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