Financial crises - Not what was unforeseen but what was unaddressed

"Nothing about this crisis was unforeseen, it was just unaddressed." 

- Karen Shaw Petrou referring to a past financial crisis

Perhaps the unaddressed is always what is the problem not what was unforeseen. As we explore the details about the current bank failures, we see that there was no surprise event that drove the crisis. We are again learning that, after the fact, all the information concerning a problem was readily available. 

A crisis occurs not from a surprise but from a cascade of change after the information is internalized or realized by a critical mass of investors. An event may serve as the wake-up call, but the underlying risks already existed. The problem is when everyone realizes there is a problem at the same time. 

Silicon Valley Bank - The huge asset-liability mismatch was well known and reported in their financial statements. The strong deposit growth which had to be invested was well-known. The large funding from the FHLB was well-known. Regulators at the San Francisco Fed were fully aware of the problem.  

Signature bank - The excess of uninsured deposits was well-known. The risks with it being a bank for crypto firms was well know. It was the focus of regulators.

Republic Bank - The excess of large deposits and significant inflows from Silicon Valley firms was well-known.

Credit Suisse - The poor management, losses, and regulatory problems were all well-known earlier. It was a bank filled with problems which could have been addressed earlier by regulators. Investor clearly had issues as evidenced by the stock price. It was just a matter of time.

All were hit with the problem of higher rates which again was not a surprise. Poor early action has led to crisis times. We cannot just say that "mistakes were made", nor can we say that these firms were hit by a shock. They were already working with poor odds. In all these cases, a critical mass of depositors acted on this awareness in a cascade which caused a run.