Its still too early to connect the dots. That all sorts of low-quality bets would be unwound with rising interest rates was indeed a given. But in such an opaque financial system, the surprises can come from any corner.
A vanilla bank business model actually benefits from rising rates as this generally widens the spread between their lending and borrowing. So then you have to look at second order effects. According to reports one causal factor is traced to their "low-credit risk" investment portfolios and various combinations of real hedging vs creative accounting for their interest rate sensitive positions. It may be that the really small banks do less of that.
In any case the long period or low rates is really not an excuse. Bankers are not extracting rents from society to play being idiots. Managing risks is what they are supposed to be paid for. You don't manage risks by assuming tomorrow will the same as yesterday.
A vanilla bank business model actually benefits from rising rates as this generally widens the spread between their lending and borrowing. So then you have to look at second order effects. According to reports one causal factor is traced to their "low-credit risk" investment portfolios and various combinations of real hedging vs creative accounting for their interest rate sensitive positions. It may be that the really small banks do less of that.
In any case the long period or low rates is really not an excuse. Bankers are not extracting rents from society to play being idiots. Managing risks is what they are supposed to be paid for. You don't manage risks by assuming tomorrow will the same as yesterday.