Move comes as policymakers grapple with how the bank, which failed within days of announcing it had to raise capital to shore up its finances, ignited fear…
The move from the Fed comes as policymakers grapple with how the bank, which failed within days of announcing it had to raise capital to shore up its finances, ignited fear across the banking system. Regulators were forced to announce relief measures on Sunday, reassuring customers that all the deposits from both that bank and New York-based Signature Bank, which was closed by regulators Sunday, would be covered.
The review suggests the Fed, which was Silicon Valley Bank’s primary regulator, could revise its policies, as policymakers across Washington grapple with what changes may need to be made to prevent future bank runs. Under current policy, banks with over $100 billion in assets are directly supervised by the Fed, with Fed staff and governors in Washington setting the direction for oversight. The actual day-to-day monitoring is handled by supervisors from various Fed regional banks. The Federal Reserve Bank of San Francisco was responsible for Silicon Valley Bank’s supervision.
The regional bank has already come under scrutiny in the wake of the failure, with some lawmakers questioning how Silicon Valley Bank was able to rapidly grow in size and end up with over 90% uninsured deposits, which made it susceptible to a run. “The San Francisco Fed had all the tools necessary to prevent this from happening,” Senator Bill Hagerty, a Tennessee Republican, said in an interview. “We need to understand why the San Francisco Fed wasn’t utilizing all the tools at its disposal from an oversight standpoint.”Share this article in your social network
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