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[quote=Anonymous][quote=Anonymous]Why the hell were they not hedging interest rate risks? That’s what is galling. They pretty much violated some of the most basic tenets of bank risk mgmt….and this was a huge bank! Even rinky-dink ag banks that deal with ag futures buy hedge protection. This isn’t sophisticated stuff for a bank of this size. [/quote] You have to admit it is a pretty dramatic swing in rates lately, short rates going from zero 0 to 5, mortgages from 3 to 7. If you wanted a bit of a yield on your fixed rate investment a year ago you would have to take interest rate risk. I don’t think the interest rate risk by itself killed the bank. I’d guess a lot more banks are in a similar situation in terms of unrealized losses due to rising rates. But SVB ballooned 3x with new uninsured deposits in the last couple of years and failed to recognize how much that added to run on bank risk[/quote]
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