Well yeah, but that's kind of like doctors saying that malpractice insurance reduces their profits in cases where it ends up not being needed.

Having a hedge and not needing it is kind of a good problem to have, assuming they didn't overleverage on that hedge. But if the hedge is overleveraged, I am not sure if it can be called a hedge anymore. Because that would make the position it was supposed to offset the hedge position instead.

Just as a doctor needs to buy the right amount of malpractice insurance, the banks need to size the hedge properly.

SVB did have other investments and some hedge. One of the core issues is that the Fed raised rates faster than any time in history and starting from some of the lowest interest rates in history. That's very difficult to predict and hedge against.