HomeEconomyU.S. regulator says risk management of Silicon Valley bank failure 'poor' Economy U.S. regulator says risk management of Silicon Valley bank failure 'poor' By inew March 28, 2023 0 58 views Share FacebookTwitterPinterestWhatsApp SBNY -.% Add to/Remove from Watchlist Add to watch list Add location Location added successfully: Please name your holding portfolio type: purchase Sell date: quantity: price Point value: Leverage: 1:1 1: 1: 1: 1 : 2018 2018 1000 Create New Watchlist Create 1000250 Create a new shareholding combination to add to create 1000200 + add another position to close Pete Schroeder and Hannah Long WASHINGTON (Reuters) – A top U.S. regulator told a Senate panel on Tuesday that Silicon Valley Bank was the largest bank before its collapse. It did a “terrible” job of managing risk, fending off criticism from lawmakers that the banking regulator lacked warning signs. Democrats and Republican lawmakers are pressuring the Fed’s top banking regulator whether the central bank should strengthen oversight of SVB. “It looks like the regulators know about the problem, but no one has put down the hammer,” said Senator Jon Tester, a Democrat. Michael Barr, the Fed’s vice chair for supervision, criticized SVB’s absence of a chief risk officer for months and how it modeled interest rate risk, which he said “has nothing to do with reality.” No match.” He added that Fed regulators had raised such issues with bank management, but they had not been addressed. “Risks are there, regulators have pointed them out and banks have not acted,” he said. SVB’s failure, and a few days later, 250250 Signature Bank (OTC: 50 SBNY ), triggering a widespread loss of investor confidence in the banking sector, which hammered the stock market and This has sparked fears of a full-blown financial crisis. Last week’s deal to rescue Swiss giant Credit Suisse and this week’s sale of SVB’s assets to First Citizens Bancshares helped restore some calm, but investors remain wary of more problems lurking in the financial system. The senior member of the Senate Banking Committee agreed with Barr that the bank was mismanaged and that former executives were to blame, but also questioned why the bank would Collapse quickly worked with regulators on the case. Barr told the committee that he first became aware of SVB’s interest rate risk problems in mid-February, and that Fed regulators had been directly addressing them for months before that. Ask the bank a question. “The collapse of Silicon Valley Bank, Signature Bank, and the general turmoil in the banking industry are the result of immediate regulatory failures, including those before us today ,” said Republican Senator Steve Daines. Barr was questioned whether the Fed’s annual “stress test” of large banks would identify risks to SVB, since the most recent test did not explore how banks Withstood the rapid rise in interest rates, even as the Federal Reserve aggressively raised borrowing costs to curb inflation. “It’s like someone is going to take a COVID test and get tested for cholera,” said Sen. John Kennedy, Republican of Louisiana. Barr agreed that testing higher rates would also be “useful” and said he hoped to expand the testing in the future. Regulators have vowed to review their rules and procedures after the twins failed, while insisting that the overall system remains sound. Barr added that he welcomes external scrutiny of the regulator’s work and wants the Fed to be “accountable” for any deficiencies it finds. Barr and FDIC Chairman Martin Gruenberg emphasized in their speeches that depositors’ funds are safe and secure. Both companies have said they are considering tightening banking rules and imposing stricter oversight on companies like SVB. Some Democrats, including Sen. Elizabeth Warren, a leading bank critic in Massachusetts, have also proposed a 11 Bank deregulation laws are to blame. The law, largely supported by Republicans and some moderate Democrats, eased restrictions on holdings at $ among the strictest supervision of the company. Billions and Billions in assets, including SVB and Signature. Barr said he expects the Fed will need to strengthen the company’s capital and liquidity standards billion assets. hearing is the first of many expected on the banking turmoil. The House Financial Services Committee will hear from the same regulator on Wednesday, and congressional leaders have said they want to question the former chief executives of the two banks about what went wrong. 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