Re:America’s banks are missing hundreds of billions of dollars
by slt2021 on Wednesday March 22, 2023 @12:53PM
(#35263851)
>>because it's considered the safest investment
you are wrong right at the first step.
there is credit risk (risk of default) and for this risk, treasuries are still considered safest.
then, there is duration risk (risk of interest rates increasing) - and this risk has always been there.
Bankers know about these risks, it is just they were greedy and decided to go for the highest yielding MBS, instead of short-term securities. => and obviously banks suffered consequences.
for bankers this is Banking 101
One can argue that what is going on right now is market forces punishing the most greedy bankers (SVB, Debit suisse, etc)
you are wrong right at the first step.
there is credit risk (risk of default) and for this risk, treasuries are still considered safest.
then, there is duration risk (risk of interest rates increasing) - and this risk has always been there.
Bankers know about these risks, it is just they were greedy and decided to go for the highest yielding MBS, instead of short-term securities. => and obviously banks suffered consequences.
for bankers this is Banking 101
One can argue that what is going on right now is market forces punishing the most greedy bankers (SVB, Debit suisse, etc)