The Federal Reserve’s oversight of SVB Financial Group is drawing fire after the bank’s sudden collapse, which led to several emergency measures from US regulators, including central bank liquidity programs to stanch instability across small lenders.
(Bloomberg) — The Federal Reserve’s oversight of SVB Financial Group is drawing fire after the bank’s sudden collapse, which led to several emergency measures from US regulators, including central bank liquidity programs to stanch instability across small lenders.
Biden administration officials are scrutinizing the quality of supervision undertaken by California state authorities and the Federal Reserve Bank of San Francisco, according to people familiar with the matter.
Regulators in Washington are assessing whether SVB and New York’s Signature Bank, which was closed after failure on Sunday, had conducted the required planning and stress testing as the Fed raised interest rates starting last year, one of the person said, speaking on the condition of anonymity. Signature had roughly $88.6 billion in deposits as of Dec. 31.
The San Francisco Fed referred questions to the Federal Reserve in Washington, which didn’t immediately respond to a request for comment.
Uncovering whether regulators missed anything in the run-up to SVB’s rapid failure is a “serious question,” according to Senator Bill Hagerty, a Tennessee Republican on the finance committee.
“Clearly Silicon Valley Bank was mismanaged,” he said Monday on Bloomberg Radio. “I don’t think enough people have asked, ‘where was the SF Fed in terms of its regulatory oversight? Was the regulatory agency asleep at the wheel here?’”
SVB Chief Executive Officer Greg Becker had served as a director at the San Francisco Fed until Friday, the day the bank failed and was taken over by state and federal regulators. He had served on the nine-member board since 2019.
–With assistance from Steven T. Dennis and Gregory Korte.
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