Fed says it failed to act with ‘adequate force and urgency’ in oversight of Silicon Valley bank
Post Date – 11:15 PM, Saturday – 4/29/23
Washington: The U.S. Federal Reserve said it failed to act with “sufficient vigor and urgency” in its oversight of Silicon Valley Bank (SVB), which collapsed last month in the country’s biggest bank failure since 2008, according to media reports. event.
According to the BBC, this conclusion is one of the main findings of the Federal Reserve’s investigation into the incident.
It sparked global concerns about the state of the banking sector.
The review comes as another US bank, First Republic, remains in deep trouble.
U.S. regulators are reportedly grappling with a possible rescue for the struggling company, which was the 14th largest U.S. bank late last year.
Michael Barr, the Fed’s vice-chairman for supervision, who oversaw the review, said the US central bank should strengthen its rules in response to the lessons it has learned from the SVB collapse, the BBC reported.
“Fed regulators have failed to act forcefully enough,” he said, noting that regulatory standards were “too low,” there was no urgency in regulation, and that problems at one midsize bank posed risks to the broader system of Fed policy failures
“After the SVB collapse, we have to strengthen the Fed’s regulation,” he said.
Fed Chairman Jerome Powell said he welcomed the “comprehensive and self-critical report.”
“I agree with and support his proposals to address our rules and supervisory practices, which I believe will lead to a stronger and more resilient banking system,” he said.
The Fed report was one of three released by U.S. officials on Friday detailing regulatory lapses that led to the collapse of SVB and Signature Bank last month.
Both banks, which cater to business clients, struggled after the U.S. central bank sharply raised interest rates last year, and customers started withdrawing money.
SVB’s subsequent announcement last month that it needed to raise capital sparked panic and billions of dollars were withdrawn overnight, forcing regulators to step in, according to the BBC.
