> the risk driver for these ongoing smaller bank failures is (reportedly) the rise in interest rates. Ultimately it's poor risk management. If you take deposit

> the risk driver for these ongoing smaller bank failures is (reportedly) the rise in interest rates. Ultimately it's poor risk management. If you take depositor funds and buy 10-30 year bonds with them then you're exposed to a run on the bank and rising interest rates will devalue your bonds. The bank instead could've rolled 30-90 day Fed funds instead but they didn't. Why? Lower yield. Put another way: the bank took a risk with depositor funds and they get wiped out because of it while depositors are fine. > the solution seems to be to create ever larger banking behemoths Yes and no. At the heart of this is fractional reserve banking, which has been wildly successful. Like any kind of risk-spreading business (including insurance) bigger is generally better because variance is less and everything becomes more predictable. I understand (and agree with) concerns about consolidation creating an oligopoly. Ultimately though, what backstops the entire financial system is the government. This was true before and it's true now. The Federal Reserve is even called the lender of last resort.