The report also points out underlying cultural issues at the Fed, where supervisors were unwilling to be hard on bank management when they saw growing problems
“The Federal Reserve did not appreciate the seriousness of critical deficiencies in the firm’s governance, liquidity, and interest rate risk management. These judgments meant that Silicon Valley Bank remained well-rated, even as conditions deteriorated and significant risk to the firm’s safety and soundness emerged,” the report said.
Two days later, they seized Signature Bank of New York. Although regulators guaranteed all the banks’ deposits, customers at other mid-size regional banks rushed to pull out their money – often with a few taps on a mobile device – and move it to the perceived safety of big money centre banks such as JPMorgan Chase.
Although the withdrawals have abated at many banks, First Republic Bank in San Francisco appears to be in peril, even after receiving a $30-billion infusion of deposits from 11 major banks in March. The bank’s shares have plunged 57 per cent this week after it revealed the extent to which customers pulled their deposits in the days after Silicon Valley Bank failed.
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