How good is current stress testing?

 To me, the biggest culprit in SVB’s failure is that the fed’s most severe stress test scenario in 2022 didn’t even consider the possibility of rising interest rates. Asleep at the wheel. pic.twitter.com/pidlaMUDnm — Will Diamond (@wdiamond_econ) March 15, 2023 I know how easy it is for some of you to write your Op-Eds calling
The post How good is current stress testing? appeared first on Marginal REVOLUTION. 

To me, the biggest culprit in SVB’s failure is that the fed’s most severe stress test scenario in 2022 didn’t even consider the possibility of rising interest rates. Asleep at the wheel. pic.twitter.com/pidlaMUDnm

— Will Diamond (@wdiamond_econ) March 15, 2023

I know how easy it is for some of you to write your Op-Eds calling for more, more, more regulation, but banking is already a remarkably regulated sector.  Maybe sometimes those regulations just don’t work so well.  (I still recall the earlier call for “have them hold more government securities!”)  And you can’t just blame that on the “plutocrats,” the “tech bros,” or whatever.

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How good is current stress testing?

How good is current stress testing?

 To me, the biggest culprit in SVB’s failure is that the fed’s most severe

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