Comment by fnordpiglet

I don’t understand. If you hold a bond to maturity you get it’s NPV. Valuing it at NPV vs mark to market has more to do with your plan than any sort of fundamental truth - they’re both legitimate ways of valuing it. The mark to market only comes relevant if you’re experiencing a run, which they were holding sufficient regulatory liquidity for. They should have hedged their rates risk a bit better, especially as inflation became even a whisper, but if it hadn’t devolved into a run this whole story would be a foot note in a quarterly filing. Rather I suspect there was a bit of market manipulation by some wealthy valley insiders that took a relatively routine asset management event and turned it into a crisis. For profit.