What bet should management have made instead of buying US treasuries and Grade A MBS? Should they have held all deposits in cash? How should they have funded operations because eventually, holding $180 billion in cash with no interest and thus no profit while running a large operation will start to eat into shareholder equity and eventually depositor capital. I think a thought experiment about what should have been done is important if we are going to assign blame for anyone. When I do that, its not clear that SVB management made some profound mistake as there were structural challenges they faced that were unique to them (large capital inflows that were a majority of deposits during a very low rate interest rate environment, client mix that kept balances that were much higher than FDIC limits, client mix that was highly concentrated in one industry with much greater sensitivity to interest rates than most companies since fundraising is now clearly seen as tightly coupled to rates) and forces outside of their control in that the Fed raised rates very quickly without providing any mechanism for member banks to exchange long term low rate securities.

So Management has to invest in something and it has to have some interest. I would love to hear an investment thesis that would have been able to deploy over $100 billion in new capital during the low interest rate 2018-2021 time period that wouldnt have been ill prepared when rates drastically increased in 2022-2023.