How worried should you be about what happened to Silicon Valley Bank (SVB)? Not much, but there are lessons to learn.
To start, there was a run on the bank. SBV’s depositors wanted their money back once the news was out that the bank’s tangible book values had declined. Deposits at a bank are a liability, so the bank purchases bonds to back those deposits, making money off the interest. However, for two full years through the pandemic, the fed funds rate was zero; consequently, U.S. Treasurys were yielding extremely low returns.
William G. Lako, Jr., CFP®, is a principal at Henssler Financial and a co-host on “Money Talks”—your trusted resource for your money, your future, your life—airing Saturdays at 10 a.m. on AM 920 The Answer. Mr. Lako is a CERTIFIED FINANCIAL PLANNER™ professional.
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Keep it Clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language.
PLEASE TURN OFF YOUR CAPS LOCK.
Don't Threaten. Threats of harming another person will not be tolerated.
Be Truthful. Don't knowingly lie about anyone or anything.
Be Nice. No racism, sexism or any sort of -ism that is degrading to another person.
Be Proactive. Use the 'Report' link on each comment to let us know of abusive posts.
Share with Us. We'd love to hear eyewitness accounts, the history behind an article.