The Federal Reserve’s banking supervisors failed to take adequate action to solve California tech lender Silicon Valley Bank’s (SVB) severe issues preceding its collapse in March, according to a report by the central bank released on Friday.
The Fed did not completely comprehend the scope of SVB’s susceptibility as it expanded “in size and complexity,” according to the review. When the Fed supervisors discovered risks, they failed to take adequate measures to compel the California bank to solve its problems promptly enough.
“Following Silicon Valley Bank’s failure, we must strengthen the Federal Reserve’s supervision and regulation based on what we have learned,” said Vice Chair for Supervision Michael S. Barr in a press release accompanying the report.
When SVB collapsed, it had “31 unaddressed safe and soundness supervisory warnings—triple the average number of peer banks,” according to the press release.
Regulators took over SVB on March 10, and its failure contributed to panic that spread and Signature Bank’s collapse on March 12. Regulators announced action to bail out all depositors at both institutions the same day, concluding, “The U.S. banking system remains resilient and on a solid foundation.”
Eleven of the largest lenders collaborated to save another similar regional bank, First Republic, by injecting it with $30 billion. However, its stock has faced three consecutive days of freefall, and it is now looking for another rescue.
“I welcome this thorough and self-critical report on Federal Reserve supervision from Vice Chair Barr,” said Fed Chair Jerome H. Powell in the press release. “I agree with and support his recommendations to address our rules and supervisory practices, and I am confident they will lead to a stronger and more resilient banking system.”
This would reverse previous decisions made during Powell’s tenure to relax regulations for midsize banks, according to The Wall Street Journal.
“Our first area of focus will be to improve the speed, force, and agility of supervision,” wrote Barr in the report.
All content created by the Daily Caller News Foundation, an independent and nonpartisan newswire service, is available without charge to any legitimate news publisher that can provide a large audience. All republished articles must include our logo, our reporter’s byline and their DCNF affiliation. For any questions about our guidelines or partnering with us, please contact licensing@dailycallernewsfoundation.org.
All content created by the Daily Caller News Foundation, an independent and nonpartisan newswire service, is available without charge to any legitimate news publisher that can provide a large audience. All republished articles must include our logo, our reporter’s byline and their DCNF affiliation. For any questions about our guidelines or partnering with us, please contact licensing@dailycallernewsfoundation.org.
JOIN US @NewRightNetwork on our Telegram, Twitter, Facebook Page and Groups, and other social media for instant news updates!
New Right Network depends on your support as a patriot-ran American news network. Donate now