Powell seems to have lost the plot. I was asking because we bank at SVB, and while the bank was seized by the FDIC, it wasn’t necessarily a failure. It was due to a run based on losses the bank too in order to make more money but they ran into consumer fear. They were invested in mortgage backed securities for the last few years as the US interest rate was garbage. They saw the potential to earn more by swapping those investments (at a loss, since no one wanted assets that would earn less than the treasury) for treasury bonds which would earn something like 3x the interest. With AUM in the billions, a 1.8B loss isn’t totally ridiculous, especially because they expected to recoup that amount from the new earnings.

But it made people nervous and companies like mine (I don’t own one, just a cog) panicked and moved tens of millions at a time which meant they couldn’t meet deposit requirements and so they failed. It was a bad investment move, sure, but I wouldn’t say THAT move signals an incoming recession.

Then again who knows. In 3 weeks I might eat those words.