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WHY did they take the hit? Because the word was out these banks were putting all of their eggs in one bond basket at the time of increasing interest rates. I am
by papito 3y ago
WHY did they take the hit? Because the word was out these banks were putting all of their eggs in one bond basket at the time of increasing interest rates. I am a just a simple country 401K investor, and even I knew not to do that.
- makomk 3y agoYour 401k is presumably mostly invested in shares. Banks aren't allowed to structure their investments like that (it's considered too risky). In general they have limited options for investment which are generally bad in times of increasing interest rates with the remaining ones being bad during recessions, not to mention the impact of the current collapse in commercial real estate demand. As far as I can tell there's no way for the government and the Fed to pursue the policies they have been without blowing up the banking system as a consequence.