I have two broad goals for this post.
First, I want to offer my working hypothesis as to the root cause of the failure of SVB Financial Group (NASDAQ:SIVB). Second, I want to tee-up a follow-up article addressing the implications of SIVB’s demise.
Investors should know that sometime in the next year, the bank’s primary regulator will write an analysis of SIVB’s failure (called a “Material Loss Review”). The “MLR” should give investors a more complete understanding of the root cause of the failure. (SIVB’s primary regulator is the Federal Reserve, not the OCC or FDIC. Ironic that the Fed Board’s interest rate actions are a major contributing factor to the bank’s failure.)
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