3min chapter

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What the Bailout of SVB Means for the Fed's Fight Against Inflation | Steven Kelly

Hidden Forces

CHAPTER

The Liquidity Crunch in Silicon Valley

Sally Kohn: The liquidity crunch that Silicon Valley experienced is very different from what we had in 2008. What we have in the case of Silicon Valley Bank is a situation where they loaded up on high quality collateral, but they did so when rates were much lower. Because the duration on much of that portfolio was long, the valuation on the securities got crushed over the last year as the Fed embarked on this steep tightening cycle. She says it's important to keep in mind there are simpler business model flaws that are the reason it failed.

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