- Debate over whether securities accounting contributed to Silicon Valley Bank's failure.
- Some banks moved large securities portfolios from 'available for sale' to 'held to maturity' last year.
- If securities are marked as held to maturity, changes in market value do not flow through income statement.
- Imposing 'available for sale' accounting on banks would force them to hold more capital or own fewer Treasuries.
- Regulatory option could be to mark securities portfolios to market or sell off if above certain size relative to bank's capital.
HTM, AFS, OMG
Did bad accounting help sink Silicon Valley Bank?
Robert Armstrong
