The Fed admitted its share of the blame for the collapse of Silicon Valley Bank – Kommersant
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The US Federal Reserve System (FRS) presented a report on the results of the investigation into the circumstances of the bankruptcy in March of the 17th largest bank in the country – Silicon Valley Bank. In 144 page report The Fed points out that the bank has fallen victim to a classic case of poor management by its management and board of directors, as well as weak oversight by the Fed itself.
Checking the causes and circumstances bankruptcy SVB was handled on behalf of the US President by Fed Vice Chairman for Banking Supervision Michael Barr. In the report Mr. Barr singled out four main conclusions of the review of the situation around the SVB. In particular, the bank’s management failed to cope with the risks, including the risk of loss of liquidity, and the supervisory authorities, that is, the Fed, did not see the scale of the vulnerabilities. When these vulnerabilities were identified by regulators, they did not take adequate steps to ensure that SVB fixed these problems quickly enough.
The situation, according to the Fed, was further aggravated by the fact that social networks and modern technologies make it possible to quickly spread rumors about the problems of the bank and withdraw funds from it with the click of a button in the bank’s application. As a result, in just two days, SVB depositors tried to withdraw $140 billion of their funds. The author of the report concludes that there is an urgent need for large-scale changes in the approach of supervisory authorities to the regulation of the country’s financial system. In particular, the changes may affect the issue of uninsured deposits, capital adequacy requirements and unrealized losses on the balance sheet of SVB. True, as Mr. Barr noted, it may take years to implement such changes.
About the banking crisis – in the material “Kommersant” “At least three volumes per month”.
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