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[quote=Anonymous][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] Isn’t this what a stress test would be designed to indicate?? [/quote] Yes. But SVB was below the stress testing threshold ($100B in assets) in 2020 and then they get a couple years to build out their ST’ing apparatus. Plus, they are subject to an every two years ST’ing requirement. I think their first ST was scheduled for 2024. It used to be that there was ST’ing starting at the $50B threshold. But the Trump administration and GOP Congress changed it in 2018 to a $100B threshold and reduced the frequency of stress tests.[/quote]
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