The US House’s top government watchdog committee has launched an investigation into the role the Federal Reserve Bank of San Francisco and other state and federal regulators played in the March failure of Silicon Valley Bank.
(Bloomberg) — The US House’s top government watchdog committee has launched an investigation into the role the Federal Reserve Bank of San Francisco and other state and federal regulators played in the March failure of Silicon Valley Bank.
Armed with subpoena power, the GOP-led Committee on Oversight and Accountability disclosed its probe in a letter Thursday from the panel’s Republican chairman James Comer to San Francisco Fed President and CEO Mary Daly.
“SF Fed appears to have failed to adequately supervise SVB and respond to the bank’s mismanagement, ultimately leading to SVB’s seizure by federal regulators — the second largest bank failure in U.S. History — and threatening a panic in our banking system,” Comer and Representative Lisa McClain, chair of the subcommittee on Health Care and Financial Services, wrote.
A San Francisco Fed spokesperson declined to comment.
The lawmakers ask Daly to provide documents and material by May 11, including all audits and other reports related to SVB and “a list of all individuals who served as lead examiners on SF Fed examination teams tasked with overseeing SVB.”
Comer and McClain said the San Francisco Fed reportedly filed at least six “Matters Requiring Attention” or other warnings against SVB as early as July 2022.
Those MRAs, they said, show Daly’s office knew by the end of 2022 that “almost 96 percent of deposits held at SVB were uninsured, making the bank susceptible to a run.”
“While the signs of significant and alarming risk were clear, no regulator used more severe tools, such as fines or consent orders, to require action from SVB,” they wrote.
The committee wants Daly to provide “all communications between the SF Fed and the Federal Reserve Board, the Federal Deposit Insurance Corporation, the Treasury Department or the White House related to SVB.”
SVB was directly supervised by the Fed, and Vice Chair of Supervision Michael Barr will be publishing the central bank’s own probe Friday.
Earlier this week, Republican Senator Ted Cruz and House Judiciary Chairman Jim Jordan in another letter requested documents from the San Francisco Fed.
Regional Fed banks have stiff-armed Congress on previous requests, and are not subject to the Freedom of Information Act because of their quasi-private status.
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