Also, effect of rising interest rates takes time to propagate. When mortgage rates skyrocket, mortgage originators can still go on for a few months even though

Also, effect of rising interest rates takes time to propagate. When mortgage rates skyrocket, mortgage originators can still go on for a few months even though they're not making any sales, as nobody's buying real estate. After a few months it becomes clear that sellers are not willing to decrease their prices and Fed is not going to cut rates any time soon, the game's over and they have to cut staff or even go out of business. Startups can continue to operate for a few months burning through their reserves even though nobody's investing in them until they... can't. When the price of bonds that banks have on their assets plunges due to increase in interest rates (they are "marked to market"). Depending on their regulatory requirements it can take a quarter or two. As a result the ratio of the assets of the banks in relation to their liabilities decreases. That's what caused SV bank to collapse (they had less money than they had liabilities and had to fold due to the bank run). In the case of citibank they had to put $1.7 bln into the government deposit insurance fund, which is likely related to the same phenomenon. Interestingly enough, they also reported that a big part of their one-time expenses ($3.8 bln total) included reorganization expenses, e.g. all the severance they had to pay to the people they laid off in 2023 and other costs related to cutting those people. Even more interesting, they expect the expense related to cutting 20,000 people to be between $700,000 and $1 billion. All things considered, Citibank doesn't strike me as a particularly well run organization, and low-level employees are paying the price. As per usual.