Comment by g42gregory

Here is what I don't understand: How is this even possible? If SVB buys $100B worth of (10yr?) T-Bonds and MBS, this will immediately show up as an enormous interest rate risk position on their internal risk profile. The Bank's Risk Manager, CEO and Management Committee are supposed to look at these things every day and should have very specific guidelines on market risk exposure bounds. Regardless of what those guidelines were, presumably $100B worth of 10-yr unhedged fixed income instruments will be way out of those bounds. How was this missed? This is not some sophisticated high finance, this is basics. What on earth happened?