Your view of the story is completely flawed. Your first point is false. There is no regulation that forces banks to buy long term government bonds. There is some regulation that forces them to have a certain percentage of capital tier 1 to safeguard themselves from bank runs, but it was repealed in 2018 by trump for “regional” banks and SVB CEO lobbied strongly for it for years and was ecstatic when it finally happened: https://www.theguardian.com/business/2023/mar/11/silicon-val... .