Federal Reserve Announces It Is Conducting Review Into Its Own Regulatory Failure of Silicon Valley Bank

The Federal Reserve on Monday announced Vice Chair for Supervision Michael S. Barr will lead a review of its regulatory failure of Silicon Valley Bank.

*FED TO PROBE ITS SUPERVISION OF SVB, RELEASE REVIEW BY MAY 1

What supervision?

— zerohedge (@zerohedge) March 13, 2023

Silicon Valley Bank was in FDIC receivership on Friday after investors withdrew more than $40 billion in a run on the bank.

“The events surrounding Silicon Valley Bank demand a thorough, transparent, and swift review by the Federal Reserve,” Fed Chairman Jerome Powell said in a statement.

“The Federal Reserve Board on Monday announced that Vice Chair for Supervision Michael S. Barr is leading a review of the supervision and regulation of Silicon Valley Bank, in light of its failure. The review will be publicly released by May 1.” the Board of Governors of the Federal Reserve announced Monday.

“We need to have humility, and conduct a careful and thorough review of how we supervised and regulated this firm, and what we should learn from this experience,” said Vice Chair Barr.

This is a regulatory failure of historic proportions by both the Fed and Treasury.

Instead of preventing billions in losses, the Fed was worrying about board diversity and Yellen was flying to Ukraine.

Everyone should be sacked immediately. https://t.co/XDd5LTI6hF

— zerohedge (@zerohedge) March 12, 2023

Zero Hedge reported:

The Federal Reserve Board on Monday announced that Vice Chair for Supervision Michael S. Barr is leading a review of the supervision and regulation of Silicon Valley Bank, in light of its failure.

“The events surrounding Silicon Valley Bank demand a thorough, transparent, and swift review by the Federal Reserve,” said Chair Jerome H. Powell.

As a reminder, it was Moody’s that initially brought up issues with SVB.

When SVB reported its fourth quarter results in early 2023, Moody’s Investor Service, a credit rating agency took notice.

In early March, it said that SVB was at high risk for a downgrade due to its significant unrealized losses.

In response, SVB looked to sell $2 billion of its investments at a loss to help boost liquidity for its struggling balance sheet. Soon, more hedge funds and venture investors realized SVB could be on thin ice. Depositors withdrew funds in droves, spurring a liquidity squeeze and prompting California regulators and the FDIC to step in and shut down the bank.

Just a reminder, here’s what Michael Barr said in a speech Thursday as the run was in full swing:

“The banks we regulate, in contrast, are well protected from bank runs through a robust array of supervisory requirements.”