@commbankerguy Wasnt the same issue last year. Deposits were not flowing out at the same rate.

@boujee_banker But their risk profile was the same. Their CAMELS sensitivity rating should have been a 4. It was a time bomb ready to explode at any moment starting in the fall.

@commbankerguy And I have bought several failed banks over the years. The FDIC does not have power to close the bank. The primary regulator declared insolvent, then FDIC as receiver moves in for a “orderly liquidation”.

@PaytonRaeDad Correct that’s how it works in the end. Im talking months ago putting them under a MOU or C&D forcing them to raise liquidity and capital. Could have been easily done if regulators were paying attention.

@commbankerguy Is this more interest rate risk versus too much credit exposure? Leading to liquidity pressures that were exacerbated in light speed this week?

@Jackjon50502208 Six months ago, I would want to see their ALM model and if it showed deficient capital up 200bps, I would have forced them to raise capital and liquidity by selling assets. Regulators weren’t paying attention.

@commbankerguy The turnover and lack of background / experience in the CRO and CIO should have been a flag, but hindsight is easy

@chasesfish True

@commbankerguy SVB was a state chartered bank (so no OCC supervision presumably), and post 2018, SVB was under updated Dodd-Frank $250bb assets threshold. Which regulator, other than FDIC, should have been looking at SVB's interest rate risk?

@YuryGruz I believe the Federal Reserve was their primary regulator. You can choose OCC, FDIC, or Fed as your federal regulator.

@commbankerguy So the timing was the issue? ie, should have re-balanced in November, and got unlucky in announcing their moves right after Powell’s testimony stoked intended caution into the market… right or wrong the market pointed at SVB and said look! And the run started rolling

@commbankerguy I think of it more a concentration risk, except on the liability side rather than the asset side. Virtually the entire deposit book concentrated in a single industry, one which is famous for moving in herds. We're taking a much closer look at the concentration of our deposits now

@commbankerguy The money flowing into their bank accounts.(not at svbc🤣)

@commbankerguy Is there a capacity gap between state regulators and their federal counterparts? Seems like much of the ratios were at levels where someone doing quarterly reviews would have taken notice.

@commbankerguy I wonder if their IRR model was playing games with their DDA decay assumptions. That might've masked the severity of the problem.

@commbankerguy Rates were dramatically different last year. Regulators test +\-300bps. No one expected +450bps in the past year. Fastest rate rise in history combined with historical excess cash. Doubt regulators even understood.

@commbankerguy How many resources does the CA regulator have, 3 people?

@commbankerguy Apparently, nothing.

@commbankerguy There are a lot of banks with large aoci losses. It’s been a trend for almost a year now. I don’t see much happening from a regulatory perspective about it yet.

@commbankerguy would this have been caught during stress testing?