![]() ![]() A few weeks ago this was blamed on concentrated depositor bases all talking to each other on WhatsApp and maybe some shadowy cabal-like behavior by VCs. The only thing new under the sun is the size and speed of the deposit flight. Banks loaded up on (good!) assets in a low-interest rate environment while flush with deposits, interest rates rose, banks became notionally insolvent or close to it, and deposits fled in a series of classic bank runs. And so many now have a simple question: Why?Īfter some bloviating by institutional actors early in the crisis, consensus is slowly pivoting from an indictment of individual banks’ management teams to recognition of a structural issue: when interest rates rise, asset prices fall. We will likely lose more, potentially many more. We recently lost another previously well-regarded, well-managed, risk-averse bank. It has been an eventful seven weeks since the start of the banking crisis. ![]()
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