So now we know why banks aren’t raising their interest rates for savings accounts: the majority of their revenue comes from net interest margins.

Since the banks hold lots of long term treasuries/mortgage backed securities, as rates went up, those assets got devalued, causing them to go under water.

The only reason they can continue to hold those assets is because they can listed them as unrealized losses not sit balance sheet.

If banks raised rates, they would start running deficits, which is bad for business.

The irony here is that since the banks can’t raise interest rates, their customers are taking their money elsewhere to generate higher yield.

This loss in deposits is forcing the banks to sell their under water assets, turning unrealized losses to actual losses.