Congress Killed Silicon Valley Bank

The collapse of Silicon Valley Bank (SVB) has unified Americans with a shared anger. Everyone — left, right and center — knows that something is wrong.

Executives sold off millions of dollars of stock before the crash, SVB paid out bonuses as it was collapsing, and the Federal Reserve created a brand new program — once again, Washington, D.C. is deciding who is “too big to fail.” But in their hard times, most Americans don’t receive a parachute payment or government bailout.

Our economic seas are so rough that the financial experts at SVB made a bad bet on U.S. Treasuries — one of the safest asset classes — and sank their bank. At the end of 2022, SVB was holding onto over $17 billion in U.S. Treasuries and another $91 billion in government-issued mortgage-backed securities (MBS) that function similarly to U.S. Bonds. These bonds were purchased when interest rates were 1.5%. As interest rates rose north of 5%, those bonds could only be sold for a substantial loss.