KPMG is the auditor of both SVB and Signature Bank. An audit opinion should include a ‘going concern’ warning if there is any doubt about the ability of a business to continue. No such warning was contained in either bank’s audit report. These latest misses put KPMG just below Scooby Doo on the inspection thoroughness scale. The difference is that the food-obsessed dog doesn’t hold himself out to be a subject matter expert in the banking industry.

The lowdown

• 🕵️ KPMG stands by audits of SVB and Signature Bank.

• 🛍️ US CPI rose 0.4% in February, up 6% from a year ago – in line with expectations.

• 🚶‍♂️ Meta lays off an additional 10,000 employees.

Featured stories

How the SVB collapse complicates the Fed’s fight against inflation

According to the FDIC, US banks are sitting on $620 billion of investment losses – of the sort that contributed to the collapse of the SVB. The losses relate to fixed income securities (bonds, MBSs etc) the banks intend to hold to maturity.

The losses have been created by the swift, upward movement of interest rates. A 2% return on a 10-year bond may have been acceptable two years ago, but now investors are demanding more. This means that the market value of such bonds has fallen below face value – the amount that will be repaid at maturity – in order to reach the desired return.

Any further increase in interest rates puts these investments deeper underwater, potentially triggering more bank runs and complicating the Fed’s effort to fight inflation ($) with interest rate rises. The ‘soft landing’ is starting to look more like an episode of Air Crash Investigation.

The content we're consuming today

• WSJ on YouTube: How the FDIC Protects Depositors’ Cash.

• Semafor: SVB's crash showed how closely Africa's startups are tied to Silicon Valley.

• Bloomberg: ‘Old-School’ Signature Bank Collapsed After Its Big Crypto Leap ($).

Off-balance sheet items

• The only thing worse than Signature Bank’s investment decisions, are its cringey music videos.

The bottom line