It depends on how much agency you ascribe to the SVB team, and things could very well have been more complicated than the commentariat gives them credit for, bu

It depends on how much agency you ascribe to the SVB team, and things could very well have been more complicated than the commentariat gives them credit for, but this was all happening in slow motion over months/a year (with an extra year before then when the writing was more or less on the wall). SVB probably should have realized that continued interest rate cuts were gonna nuke their MBS, and sold them at a loss earlier, so they could recapitalize in safer instruments like short term treasuries. What I’m learning about reserve requirements is that this would have actually reduced their “assets in reserve” though because they were allowed to use the maturity price of the MBS for that accounting. So selling them at a loss and buying short term treasuries would have reduced the amount of assets in reserve by that calculation, even though it would have been the same amount of assets (at the time of the transaction) in mark-to-market value AND safer against further interest rate increases. I’m guessing this dilemma at some point got so bad that they literally could not recapitalize anymore without becoming insolvent, at which point their only option was to hold the MBS through further losses