On Monday’s broadcast of MSNBC’s “Morning Joe,” Steve Rattner, who served as counselor to the Treasury Secretary in the Obama administration, stated that most of the risky behavior by Silicon Valley Bank (SVB) “was hiding in plain sight” and should have been detected by regulators by looking at the bank’s financial statements.
Rattner stated that SVB made “a classic sort of mistake…what these guys did was they took all those depositors’ inflows that came during the tech boom of 2020, 2021 and they put a bunch of them into long-term securities. And the first thing that happens when interest rates rise is that the value of long-term securities goes down. And so, then, when depositors started to take their money out because of the tech sort of unwind and capital coming out of the tech world, they didn’t have the cash. And they went to sell these securities, they weren’t worth what they thought they were worth. That word got out.”
He added, “[F]rom a Washington point of view, this is not just a failure by the management of SVB. This is a regulatory failure, that most of what SVB was doing was hiding in plain sight. You just had to really read their financial statements carefully. And so, there [are] going to be a lot of questions here about the regulators and where they were while all of this was going on.”
Follow Ian Hanchett on Twitter @IanHanchett
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