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Yeah, SVB failed because of an deposit duration/asset maturity mismatch, which couldn’t be corrected due to the cost of rolling those assets, which was a result of terrible risk management on their balance sheet. Their completely loss of liquidity was a function of that. Not a function of the bank being insolvent.

brendan 2y ago

if they were to liquidate the rest of their long duration assets at current market value would they have enough capital to cover deposits?

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Ralphy 2y ago

Probably not. But I’m assuming someone (fed or someone with big pockets) would be willing to trade them cash for the guaranteed face value of the bonds at maturity, with a haircut of course to make it worth their while