We have heard a good deal of uninformed guff recently about asset-liability mismatches in the coverage of runs on banks and the spectacular collapse of Silicon Valley Bank.
I first became aware of asset-liability mismatches in banking around the spring of 1981 when I was doing a graduate trainee stint in the currency disposals department at the former Midland Bank International, and have been warning against them ever since.
Nothing to my mind justifies taking a sight deposit and 'transforming' that into a 25-year mortgage loan. Nothing. What has become an inherent and unquestioned component of banking practice is just wrong.
I've been called a Cassandra so many times I have lost count, but in the end, if you recall, Cassandra was proved 100% right.
'Banks' have only themselves to blame and should, in my opinion, be left to go well and truly bust, and the survivors to pick over their skeletons.
