Sounds like the savings & loan crash in the 1980s and 90s. The banks had long term loans for revenue and short term deposits, so when interest rates went up they had to pay more for their money with no chance of earning more on their loans.
I'm shocked that SVB didn't learn the lesson that you have to match terms of assets and liabilities.
Part of the problem is that it’s impossible to do this during periods of rapid changes in interest rates. That’s because retail banking — especially mortgage lending — is one of the few areas where the rules are rigged in favor of the customers and AGAINST the banks.
Case in point … There is no such thing as a fixed-rate mortgage. Sure, you can sign a mortgage with a 30-year amortization at a fixed interest rate. But you can always refinance that mortgage at any time. The lender doesn’t have this option. So at a time like this with rising interest rates, you have banks or mortgage bond holders sitting on mortgages like mine (less than two years into a 30-year mortgage at 3.1%) while the prevailing rates on mortgages have climbed up to the 7% range.
I have an open offer to my bank. I will pay the entire balance in full if they will accept 20 cents on the dollar. :-)