Allowing the financial institution to borrow against the par value of assets is exactly what the Federal Home Loan Bank Board encouraged near the tail end of the S&L crisis. It did not end well.
Allowing the financial institution to borrow against the par value of assets is exactly what the Federal Home Loan Bank Board encouraged near the tail end of the S&L crisis. It did not end well.
Re-emerging comment that I deleted instead of editing. Doh.
I think I must have missed something in the many changes since Basel II. As interest rates went up, SVB moved its long-dated federal bonds into hold-to-maturity classification. But I thought that the point of mark-to-market was to create transparency on assets that are reasonably easy to value -- like federal bond holdings. But no one is saying that it was inappropriate to classify these bonds as HTM, so that must be Ok. What am I missing?
Allowing the financial institution to borrow against the par value of assets is exactly what the Federal Home Loan Bank Board encouraged near the tail end of the S&L crisis. It did not end well.
Re-emerging comment that I deleted instead of editing. Doh.
I think I must have missed something in the many changes since Basel II. As interest rates went up, SVB moved its long-dated federal bonds into hold-to-maturity classification. But I thought that the point of mark-to-market was to create transparency on assets that are reasonably easy to value -- like federal bond holdings. But no one is saying that it was inappropriate to classify these bonds as HTM, so that must be Ok. What am I missing?
HTM is a scam. It is similar to what the FHLBB encouraged that raised the cost of that bailout
Aha. I didnтАЩt miss something after all!