Is the Silicon Valley Bank’s Failure the First Domino?

Source: Libertarian Institute
by Doug French

“Banks are able to use a little accounting trickery pokery as it concerns bonds designated ‘available-for-sale,’ as opposed to ‘held-to-maturity.’ The available-for-sale label allows banks to ‘exclude the paper losses on those holdings from its earnings and regulatory capital, although the losses [do] count in equity.’ Held-to-maturity allows banks ‘under the accounting rules to exclude paper losses on those holdings from both its earnings and equity.’ This problem is not particular to the bank serving techland. The Federal Deposit Insurance Corp. reported that U.S. banks’ unrealized losses on available-for-sale and held-to-maturity securities totaled $690 billion as of Sept. 30, up 47 percent from a quarter earlier, reported the WSJ.” (03/13/23)