Right. I've been consistent that SVB messed up. They didn't hedge interest rate risk (apparently at all). They didn't have a functioning risk management department at a critical period. 20/20 hindsight and all that.
It doesn't change the facts that the Treasury and the Fed were still touting 10-year bonds in 2021 as safe investments (and therefore adequate assets for capitalization purposes), and that a stress test in 2022 would probably not have detected the interest rate risk based on the Fed's 10-year Treasury yields rise to a "worst case" 2.5% scenario. Stress tests aren't a magic bullet.
Look at Bank of America's balance sheet and their unrealized losses. They also didn't hedge risk to the extent that most of the other large banks did.
It doesn't change the facts that the Treasury and the Fed were still touting 10-year bonds in 2021 as safe investments (and therefore adequate assets for capitalization purposes), and that a stress test in 2022 would probably not have detected the interest rate risk based on the Fed's 10-year Treasury yields rise to a "worst case" 2.5% scenario. Stress tests aren't a magic bullet.
Look at Bank of America's balance sheet and their unrealized losses. They also didn't hedge risk to the extent that most of the other large banks did.