When interest rates rose, (1) fewer deposits came in as venture capital funding dried up and (2) the market value of those securities plummeted: who would want to buy a 10 year Treasury paying out 1% when you can buy one from the government for 3.5%?. While Silicon Valley Bank used to primarily lend out money on shorter-term durations, in 2021 the bank shifted to longer-term securities in search of more yield this, in retrospect, was the critical mistake - and to be clear, Silicon Valley Bank’s management bears ultimate culpability for the bank’s fate. Treasuries) and home owners (in the form of agency mortgage-backed securities 1).
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