Why Silicon Valley Bank Went Bust | Joseph Wang

Banks often use hedges to protect themselves from losses when interest rates rise. This means that even if their bond portfolio loses money, they can make money from the hedges, and overall, their assets won't decrease too much. However, Silicon Valley companies did not use interest rate hedges and instead made risky bets that interest rates would stay low forever. This strategy did not work out well for them.

Watch this video from SPECIAL REPORT: Silicon Valley Bank - How Worried Should We Be? | Joseph Wang, Former Fed Insider.

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[ReconPro]

They should have've posted their losses on WSB

[louisedost]

WHATS ARE HEDGES ? Bushes???? Please explain!

[tomsawyer]

He literally just said if the bank sells all the assets, it will not have enough to pay for their deposits "immediately". What does that even mean? 😂

[ruthlessluder]

The stupid zooming makes this unwatchable

[williamslocum]

They were scamming or as stupid as FTX.

[danielalonzo]

Hedge is an insurance policy against interest hikes

[fazdoll]

You're killin' it with the 📁💸💰😨

[ricardokowalski]

It is almost as if they shunned hedges because they misunderstood the risk. Wonder if SVB had a risk manager...🤔❓