A lot of people were suggesting on other sites that SVB collapsed because a lot of money was held in government bonds and was hard to liquidate because of the rise in interest rates. If that was the case, why was there no facility for the bonds to just be bought back and instead the bank had to collapse into a bigger one that could make more profit from it (or have a greater burden themselves).
This is a very good question. I have a good friend that is a retired banker. He was the lead man for his bank's bond investments. He practiced constant ladder technique so that the bonds held were spread out . This prevents a move like SVB did.
Basically bet all bond investment money in one shot at 1.5% rate and thinking the Fed would pivot.
March 17, 2022 +25 0.25% to 0.50%. no issues here
May 5, 2022 +50 0.75% to 1.00% maybe some fear but selling off right here means a small easy to fix loss
June 16, 2022 +75 1.50% to 1.75%. truly in the hole and the beginning of a let it ride mind set
July 27, 2022 +75 2.25% to 2.50% got worse and likely the last decent chance to bail without a real issue.
Sept 21, 2022 +75 3.00% to 3.25% I think the rumors of financial problems may have begun
Nov 2, 2022 +75 3.75% to 4.00% pretty certain the bank knows it is fucked.
Dec 14, 2022 +50 4.25% to 4.50% and worse
Feb 1, 2023 +25 4.50% to 4.75% and worse at this point top people were selling their stock off.
March 22, 2023 +25 4.75% to 5.00% bank has closed
note all from Forbes and I corrected the March 22 date as they had it as march 2.
https://www.forbes.com/advisor/investing/fed-funds-rate-history/I have to ask my friend what can a bank do in the case above.
My guess is the bond person knew they really fucked up and hide the issue for close to a year.