Michael Hiltzik: As Silicon Valley Bank's red flags were flying, the Fed was AWOL
On Jan. 18, William C. Martin, a short-seller and former hedge fund executive, warned his Twitter followers that they were missing something important about Silicon Valley Bank.
SVB's shares had lost about 65% of their value over the previous 12 months. Investors had been "rightly fixated" on the bank's exposure to the venture world, which was getting hammered by the rapid run-up in interest rates, he wrote.
"However, dig just a little deeper, and you will find a much bigger set of problems," he wrote.
What Martin had spotted was a plunge in the value of securities in the bank's portfolio of "held to maturity" securities — Treasury bonds and government-backed mortgage securities that it owned as a backstop to its deposits.
Because the bank had no intention of selling the so-called
