Isn't that just as bad? If it's illegal to act without a risk manager, you can't make bad risk decisions or investments like SVB did, but you can't make good or necessary ones either.

Exactly, listen to anyone in banking. The idea of buying and holding such long dated MBS and LETTING YOUR HEDGES EXPIRE just as the Fed was raising rates is just unheard of. Even if they were allowed, it was spectacularly unwise and not just in hindsight.

https://youtu.be/GdfYnqyu7v8 There are multiple banking insiders who've discussed this that come to the same conclusion, here's a simple one for those who don't want to do any research, just WTF?!?

But why were they allowed to do this? Why could they add $120B in low interest bonds when rates were low and lots of cash was coming in during the pandemic?

Because the regulations were loosened in May of 2018 with lobbying by SVB (and possibly Thiel himself) they were just below the $250B limit. Also, what the hell were companies doing with $250M deposits earning nothing (not being swept into MoneyMarkets), when they could have been making $10M a year and been safe from losing it? Apparently, because their VCs recommended it.