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This is all the fault of the fed and ZIRP. It's the S&L crisis all over again. Any bank that has not hedged their interest rate exposure is a lot of trouble r
by jgalt212 4y ago
This is all the fault of the fed and ZIRP. It's the S&L crisis all over again. Any bank that has not hedged their interest rate exposure is a lot of trouble right now. I don't want to claim zero big banks are in trouble, but I would claim that zero big banks are in trouble due to unhedged interest rate risk.
- okhobb 4y agoThis might be downvoted due to the FED finger point, but that aside it is exactly right. A responsible banker would have invested in floating-rate securities or hedged the fixed-rate risk via interest rate swaps. SVB was certainly sophisticated enough to know this.