Especially illogical, considering it's not their own money that they locked, but customers funds (that they owe to the customer in the short-term).
If that was the market clearing price, then to the extent that rate expectations set the bond price (which of course is debatable) this would have been the consensus view at the time.
Re:FDIC Takes over Silicon Valley Bank
by Dylan16807 on Friday March 10, 2023 @07:48PM
(#35103652)
You can't really capture consensus with a single number.
Maybe the market expects a likely range of 1%-2%. Maybe the market expects a likely range of 0%-5%. Those could both have an expected value of 1.5%, with much different levels of risk for this use case.
Re:FDIC Takes over Silicon Valley Bank
by BoiledCabbage on Friday March 10, 2023 @06:46PM
(#35102987)
They wanted to chase high-yields in low yield environment. The only way to do so was to take on more risk, specifically interest rate risk. They ignored the fact that it was risky because it was a "safe bond" and got nailed by it.
Did they expect interest rates to stay at 0 for 10 years? That is illogical.