I had seen an interview somewhere where they claimed that SVB also made a mistake in tying up billions in cash in bonds before the Fed raised rates. So, if they wanted to liquidate, they'd have to take a haircut to match the new yield. It still comes down to the liquidity problem you mentioned.

I've met some financial types, socially. After they get their degree, they generally forget everything they learned. They only know enough to operate the products their company offers. They're sales people more than finance experts.