It is pretty predictable that they would experience a bank run given interest rates going up though. They locked the money up for way too long so it would've impacted the interest rates they could offer, meaning people would want to move their money outside of any panic instinct. Maybe if it were a bit more spread out over time they wouldn't have entirely collapsed, but they put 40% of their deposits in these things, it still definitely would've stung.
Not disagreeing that MBS is irrelevant, and yeah the risk rating of the bond wasn't a problem as this will pay what it said is would. Just saying it was a stupid move to buy such a large amount of such a long term bond when interest rates can't go anywhere but up and you're using borrowed money to do it. From that perspective it was a risky move.
Not disagreeing that MBS is irrelevant, and yeah the risk rating of the bond wasn't a problem as this will pay what it said is would. Just saying it was a stupid move to buy such a large amount of such a long term bond when interest rates can't go anywhere but up and you're using borrowed money to do it. From that perspective it was a risky move.