Of sure derivities had anything to do here. Simple case of being on the wrong side of the interest cycle. If the had to mark to market their long term interest securities they had no equity cushion and therefore were insolvent in face of a bank run.
According to one article posted here yesterday, more than 90% of SVB’s reserves were in long-term bonds that were paying an average annual rate of less than 1.6%. How can a bank stay in business when their investment strategy includes this kind of idiocy?
“If the had to mark to market their long term interest securities they had no equity cushion and therefore were insolvent in face of a bank run.”
You just described every major bank—you know that, right?