That said, it seems the core of the issue was that SVB wasn't properly hedged against interest rate hikes.
My question is: why not? I understand that they were without a Chief Risk Officer for the last 10-11 months, but that's not really a problem if you think about it on a more macro-scale - as we've had a near-zero-interest-rate environment for a lot longer than that, so wouldn't the most basic plan of action when rates first hit that low for some officer of the bank to say "gee, these rates are dangerously low...and one day before these 10-year bonds fully mature, rates will probably go up, so shouldn't we take the obvious step to ensure we don't get absolutely fucked if rates go higher again?". I mean, these are bankers we're talking about...their whole job is to identify and manage risks.
EDIT: I am aware there are financial instruments and vehicles that banks' trading desks can't trade, so buying specific ETFs or stocks as a hedge is off the table - but that begs the question - why not go and buy some shorter-dated vehicles such as Treasury Notes that mature a lot faster and are much more liquid?
That said, it seems the core of the issue was that SVB wasn't properly hedged against interest rate hikes.
My question is: why not? I understand that they were without a Chief Risk Officer for the last 10-11 months, but that's not really a problem if you think about it on a more macro-scale - as we've had a near-zero-interest-rate environment for a lot longer than that, so wouldn't the most basic plan of action when rates first hit that low for some officer of the bank to say "gee, these rates are dangerously low...and one day before these 10-year bonds fully mature, rates will probably go up, so shouldn't we take the obvious step to ensure we don't get absolutely fucked if rates go higher again?". I mean, these are bankers we're talking about...their whole job is to identify and manage risks.
EDIT: I am aware there are financial instruments and vehicles that banks' trading desks can't trade, so buying specific ETFs or stocks as a hedge is off the table - but that begs the question - why not go and buy some shorter-dated vehicles such as Treasury Notes that mature a lot faster and are much more liquid?