Clifford Rossi, in GARP’s Cro Outlook, argues that Insufficient board oversight, incomplete modeling and poor liquidity risk management practices were key factors that led to the bank’s demise.

Technically, he underlines that the bank failed due to a liquidity crisis – i.e., a lack of sufficient cash inflows to sustain it during a period of significant cash outflows (notably the customer withdrawals of $42 billion in a single day).

The company made several risk management blunders. The first was in placing large bets on Treasury bonds back when interest rates were low.