- The Federal Reserve's prolonged period of low interest rates created many financial dislocations that are now flaring up.
- Case in point: Silicon Valley Bank imploded in a single day after surging interest rates caused it to sell a bond portfolio at a huge loss.
- The situation is an example of how low-interest-rate risk-taking can backfire as financial conditions tighten.
The market on Friday watched as regulators shut the doors at Silicon Valley Bank, capping off a speedy decline and marking the biggest bank failure since 2008.