SVB and bank capital, revisited

Bank capital matters too much to be left to a ratio — Via FTAV

As a financial crisis starts receding from view, so begins the time-consuming analysis of 10Ks and 10Qs to determine the cause.

But crises happen in 8Ks — the normally innocuous ad hoc filings that also accompany company emergencies — not 10Ks. Ex post analysis too often ignores the way markets assessed and triggered a crisis in real time, and instead finds a way to back into the answer in Excel. The 2023 bank crisis really began when Silicon Valley Bank filed an 8K on March 8 suggesting its business was less viable than hoped at this point in the macroeconomic cycle…

Continue reading at the Financial Times Alphaville here (no paywall; only email registration required). Thanks to Alex Scaggs for the excellent editing.