From what I’ve read on this, the root cause of all of this wasn’t treasury bonds, it’s that banks are allowed by regulators now to behave like risky investors and invest nearly all of their deposit money. Most large banks won’t do that and risk collapse, but the smaller and ‘scrappier’ ones will - but that’s also how they promise higher returns to their clients than the bigger banks.
Exacerbating that right now is that all of the investments fell apart at once. The silicon valley companies who have loans with them aren’t making payments, or are paying late, cutting off the cash flow they normally use to cover some deposits. Their stock market and bitcoin investments became too volatile to sell and fill the gap. So the least damaging loss they could take were selling treasury bonds too early, except that act triggered questions about their stability and a run on deposits.
I listed all of those because if any one of those wouldn’t have happened, SVB would still be doing business today. Limping along, but still there.
