Tiangou wrote:
[quote=M A V I C]
Reading other sources, what played a much bigger role was the Fed's rapid increase in interest rates.
...Which wouldn't have had any significant effect had the bank employed a risk officer,
The bank did employ a risk officer when the bonds were purchased (2021), into 2022. They left the company in October 2022, though it's said they stoped performing their duties in April 2022.
been subject to audits, and made periodic stress tests per the previous regs.
People say this, but no specific details have been provided - have you seen any? I haven't. Maybe they exist. At this point, it's just speculation that those measures would have fully prevented it. They did seek outside advice and those companies do have oversight.
Interest rates fluctuate. This is BASIC. It should have been factored in and their strategy modified accordingly.
That's a gross oversimplification. Rates increased at an unprecedented rate. I recently worked for a company that was backed by a top 5 US lender and even the execs at that lender were surprised at the sharp increase.
It took a phenomenal amount of recklessness to get here. With any oversight, this would have been caught early and nipped in the bud.
No and maybe. They bought long term bonds at a low interest rate that their chief risk officer didn't catch. The outside advisor also didn't catch this.
I'm not saying I think raising the threshold from $50 billion in assets to $250 billion was a good move, just that at best, with the information available, it's speculation as to if that would have stopped this or not and that we know for sure the interest rate hike is the actual cause.
