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Eh, this really seems like moving the goal posts. The problem with SVB &other is not that they fundamentally were losing money. They just weren't making _enoug
by lesuorac 4y ago
Eh, this really seems like moving the goal posts.
The problem with SVB &other is not that they fundamentally were losing money. They just weren't making _enough_ money so they took on additional risk. If SVB hedged the IRR they wouldn't have gone bankrupt; they just would've had less profit.
The banks people want are technically feasible.
- bradleyjg 4y agoThere’s no way to provide risk free returns on demand deposits, other than the government just deciding to give away money. Hedging doesn’t magically eliminate risk at zero cost.
- lesuorac 4y agoSure, in the technically true way. However, in practical terms banks have done a great job of making loans that get repaid more often than not. People are ok with having a bank that pays 0% interest and uses the difference between loan's rate and the real rate to operate successfully; bankers are not ok with leaving money on the table.