Silicon Valley’s Executives and Managers Garnered Doubled Loans Prior to the Tech Hub’s Downfall

The Silicon Valley Bank more than tripled lending to bank officials and managers in late 2022, just months before its collapse, according to the bank’s internal credit data.

Data commonly reported to the federal government showed that loans made to officials, directors, major shareholders and related interests jumped from $66 million in the third quarter of 2022 to $219 million in the fourth quarter.

The jump in bank loans in this category came as the Federal Reserve noted problems with how the Silicon Valley bank tracks interest rate risk, or the bank’s exposure to changes in interest rates.

This is a record amount of loans granted to officers, directors and major shareholders over the past two decades.

The bank invested heavily in long-term mortgage-backed securities when interest rates were low during the pandemic.

However, as interest rates rose, the Silicon Valley bank’s investment lost about $15 billion.

Officials raised interest rates again by 0.25 percentage points after multiple setbacks in the banking sector prompted some Wall Street analysts to call for a pause.

Source: Hill

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