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At some point, the fed is going to have to take some accountability for the fact that hiking rates by 4% in one year (from literally 0%) was going to have some
by pclmulqdq 4y ago
At some point, the fed is going to have to take some accountability for the fact that hiking rates by 4% in one year (from literally 0%) was going to have some unintended consequences. People at SVB and other banks likely only modeled for rate hikes of 25 bps, which would have meant a limit on the interest rate delta of 2%/year. Everyone knew the fed was going to hike, but I doubt most of them modeled for the tail risk of the fed hiking that fast.
- Loughla 4y agoI don't understand what you're saying or understand the logic of blaming a third party for the failure of the first party.
- pclmulqdq 4y agoI'm simply looking for a root cause. What I'm saying is that one bank failure is their fault, but 3 bank failures within a week probably has some other root cause. In this case, that root cause is probably the one big fundamental change in the macroeconomic environment over the last year. By the way, I don't envy the Fed's position, but they did put themselves there with 10 years of free money that they abruptly ended.