The Federal Reserve's headquarters in Washington, D.C. iStock photo/File
The Federal Reserve has launched a review of its own supervision of Silicon Valley Bank following the bank’s failure.
“The events surrounding Silicon Valley Bank demand a thorough, transparent, and swift review by the Federal Reserve,” Fed Chair Jerome Powell said in a statement yesterday.
The statement said Michael Barr, vice chair for supervision, would lead the review, which will be released to the public by May 1.
“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,” Barr said in the statement.
The Independent Community Bankers of America commended the Federal Reserve for launching the review and called on other agencies to conduct similar reviews related to Silicon Valley Bank’s regulation.
“To ensure the nation appropriately understands the Silicon Valley Bank closure, policymakers must distinguish large, risky financial institutions from the Main Street community banks that serve local consumers and small businesses,” ICBA President and CEO Rebecca Romero Rainey said in a statement yesterday.
In a separate statement yesterday, Romero Rainey had noted that Silicon Valley Bank was the nation’s 16th largest bank with asset growth of 215 percent from the end of 2019 to the end of 2022.
“It’s sad to see any bank fail and for depositors to suffer any uncertainty about the safety of their deposits,” Romero Rainey said. “This is why it’s important to take stock of lessons learned from the Silicon Valley Bank closure.”
She added that the ICBA would “vehemently oppose” community banks having to bear financial responsibility for potential losses to the deposit insurance fund, which will cover all deposits for both Silicon Valley Bank and Signature Bank customers.
In announcing that deposits, including uninsured deposits, at Silicon Valley Bank and Signature Bank would be covered by the deposit insurance fund, the FDIC had noted that the law requires that, if the deposit insurance fund sees losses from covering uninsured deposits, those losses would be recovered by a special assessment on banks.
