Back to the SVB failure:
I accidentally posted this comment to another thread, but it belongs here.
Several right-wing American politicians stated that SVB failed due to "wokeness".
The New York Times fact-check department, pooping the party, checked the normal "D&I" and "ESG" scorekeepers for the financial industry and found SVB parked right near the middle/median of its peer group.
Facts are for losers.
Blaming risk management is always easy in hindsight.
In foresight, risk management, like safety, is often considered a cost center, rather than prudent management.
However, there are some risk management algorithms and tools that may not use appropriate statistical distributions: the risk probability of future not-yet-announced interest-rate changes may not be normally distributed.
(bold added)
First, to Mr. TimFox. In quoting you this way, it may appear I am arguing with you. That is not my purpose. I am however (respectfully) borrowing your words to point out how SVB failed their given mission. No argument intended.
re:
Several right-wing American politicians stated that SVB failed due to "wokeness".That is probably because SVB was very outspoken about it. Hiring based on equality, loaning based on equality, so forth. Having a DEI department itself is not the issue. The outspokenness on the issue suggests that they deem it more important than other less high-lighted issues.
re:
Blaming risk management is always easy in hindsight.Most if not all accounting department functions are on the costs side of the ledger. If everybody pay their bills and did the numbers right, the math should automatically work out. Most company have accounting department because they know "relying on it to just automatically add up right" is too risky.
For a bank that is heavy on the investment side, not having a CRO (Chief Risk Management Officer) is inexcusable. It suggest they
believe that investment of any kind will always work out, profit will just keep coming. The need to distinct good investments vs bad investments should be in their DNA, their reflexes, their prefrontal cortexes, and their muscle memory 24/7.
Putting both quoted points together, it paints a very dark picture. It gives the appearance that idealistic empty brains are running that organization.
SVB's mission statement in their own word is ""Our mission is to increase the probability of our clients' success." How on earth do they expect to accomplish their mission with these kinds of decision making? Only an empty-brain would decide like that for their given mission.