The real question is why the regulators didn't notice.
Banking is far, far from a free market. Especially since 2008. There is heavy regulation, stress tests, etc.
People keep talking about how we need more/better regulations but none of that matters if the regulators look at a bank doing risky stuff and don't realize that it is doing risky stuff.
One of the reasons I'm glad about the government's announcement tonight is that I suspect there are a lot of other banks that are similarly exposed to the kind of duration risk SVB was, including First Republic, and now that people are looking for that the chance of further bank runs is pretty high.
Given that the collapse of a bank that had less than that is now the second largest failure ever, lowering that threshold would be a pretty good start.
Banking is far, far from a free market. Especially since 2008. There is heavy regulation, stress tests, etc.
People keep talking about how we need more/better regulations but none of that matters if the regulators look at a bank doing risky stuff and don't realize that it is doing risky stuff.
One of the reasons I'm glad about the government's announcement tonight is that I suspect there are a lot of other banks that are similarly exposed to the kind of duration risk SVB was, including First Republic, and now that people are looking for that the chance of further bank runs is pretty high.