> The "failure" seems to be a combination of not factoring in interest rate changes well enough, and "internet panic" spreading faster than it has in the past.
They didn't have a CRO for 9 months and had a bunch of assets that aren't currently valuable enough to cover deposits, so once people realized this, what were they supposed to do? The bank had already effectively lost their money. I know that no CRO doesn't mean that nobody is sitting at the risk desk, but the fact that they were forced out in weird circumstances and not replaced can also be taken to say that they knew they were running in a risky way for a long time and nobody was willing to sit in the hot seat by signing off on that.
This comes up in every liquidity crisis, here's an article from 2022 describing how people like to blame the victims instead of the bank:
And the thing they say will be that your institution is undergoing stress, and that the first people to withdrawal their deposits will get 100% of their money, but that later depositors attempting to withdraw might not.
And then you end up with a bank run, the most dangerous auto-catalyzing part of bank failures, where your depositors race to get their money out.
In most cases, if you’re killed by a bank run, the damage was done long before. You earned your fate via years of diligent work making bad loans, and became insolvent. The bank run revealed the insolvency.
Failing bankers often don’t agree with this. They think e.g. the liquidity constraint caused by the bank run made them need to sell off assets at a discount to their true value. If they had realized the true value of the assets, if people had just been patient, they argue, the bank would have survived.
Source
The fact that their assets couldn't actually be sold to cover their liabilities is kind of an issue. People want money, not excuses about how they could get it if we calmly sell these assets for closer to their real value in the far future. If you disagree, feel free to buy some bitcoin now, I hear they're really worth $80k. Just gotta have diamond hands, bro. What do you mean you might need that money before it gets to $80k again?