MBS having too many defaults was the problem in 2008, which I think is making people turn their attention to this issue. However, we are in a different situation today. IMO the tradable securities that SVB held are probably the least of their problems. The MBS certainly has the problem of being worth less due to higher interest rates.
The MBS at least though is tradable and has a market price. Their own book of loans though is much larger and is subject to the same interest rate problems as their MBS and treasuries, and in addition to having lost value due to interest rate issues, it may now have default issues as well. Not a good combination.
The MBS at least though is tradable and has a market price. Their own book of loans though is much larger and is subject to the same interest rate problems as their MBS and treasuries, and in addition to having lost value due to interest rate issues, it may now have default issues as well. Not a good combination.