Federal Reserve chair Jerome Powell said a “careful and thoughtful” review is needed to understand how the bank collapsed under its watch.
The Federal Reserve is investigating what led to the collapse of Silicon Valley Bank, including how it oversees and regulates the now-failed financial institution.
The Federal Reserve announced on March 13 that Vice President for Supervision Michael Barr is conducting an investigation of the supervision and regulation of Silicon Valley Bank, due to its failure, and the investigation should be made public until May 1. “The events surrounding Silicon Valley Bank require a thorough, transparent and swift investigation by the Federal Reserve,” Chairman Jerome Powell said in the announcement.
“We need to be humble and do a careful and careful analysis of how we manage and control this business, and what we need to learn from the experience,” added vice president Barr. The California Department of Securities and Innovation shut down SVB on March 10, without giving reasons for the bank’s forced closure.
However, before that was closed, SVB was reportedly on the verge of collapse due to severe liquidity problems related to large losses on central government investment and fear of depositors. It was the second major US bank to fail last week, following the failure of cryptocurrency honouring Silvergate, as its parent company Silvergate Capital Corporation announced a voluntary liquidation on March 8.
Adding to the chaos, another crypto-backed US bank collapsed on March 12 when the New York Department of Financial Services seized Signature Bank. The Federal Reserve’s latest announcement comes a day after it unveiled a $25 billion bank bailout program to support struggling banks, prevent further meltdowns and protect depositors.
The Biden administration acted quickly on this, the President announced on March 13 that:
“America can be confident in the safety of the banking system. Your deposits will be there when you need them. […] No loss will be borne by the taxpayers.
Biden added that the managers of the failed banks will be held accountable for their failures and suggested that those responsible should be prosecuted. He also called for stricter banking supervision and stressed that a thorough investigation would be carried out.
“We need to get a full account of what happened,” he said.
Get $200 Free Bitcoins every hour! No Deposit No Credit Card required. Sign Up