Missing the Signs at Silicon Valley Bank

The failure of Silicon Valley Bank should not have been a surprise to financial executives and bank regulators. They should have seen it coming, and the fact that they didn’t raises significant concerns about the post-2008 regulatory apparatus that was supposed to prevent this kind of thing.

SVB’s failure was not due to fraud or deception, or at least no evidence we have so far suggests as much. The bank wasn’t trying to pull a fast one on depositors or lie to inspectors. It made poor decisions that culminated in...