Why Did Silicon Valley Bank Fail?

This will blow our mind!

The sudden failure of Silicon Valley Bank, the 18th largest bank in the US, has raised concerns about liquidity risk created by the US Federal Reserve since 2008, and particularly since 2020. The bank's management had invested half its assets in mortgage-backed securities, which increased the bank's vulnerability to extension risk, leading to its downfall. The article highlights the negative impact of quantitative easing (QE) and other market manipulations by the Federal Reserve. The Fed's actions have helped to refinance two-thirds of all mortgages and an equal portion of corporate debt at very low yields. However, the Fed's policy has also concentrated a large amount of debt within a band of just three percentage points, leaving much of the COVID-era debt underwater when the Fed began to tighten policy and end asset purchases in 2021.

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