Did US hedge accounting rules contribute to SVB’s recklessness? – Risk.net

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When Silicon Valley Bank’s deposit base nearly doubled in 2021 due to an influx of venture capital money, it had a big decision to make.
Having invested the cash in fixed rate bonds, SVB had to choose between classifying them as either held-to-maturity (HTM) or available-for-sale (AFS). HTM securities are carried on the balance sheet at amortised cost, while AFS holdings must be marked-to-market.
There was another factor to consider. Accounting standards at the time made it difficult to get
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