Fed Reviews SVB Collapse


The Federal Reserve, in a report released yesterday, said last month’s historic collapse of California-based Silicon Valley Bank was due to poor management, insufficient government oversight, and weak regulations, as the company’s balance sheet ballooned from $71B to $211B over two years.


The regulator said it will work on tougher supervision and stronger standards that apply to a broader set of financial institutions, particularly banks with $100B or more in assets. Read the 112-page report here (scroll down, click PDF).


Silicon Valley Bank’s collapse (see overview) is the second largest since the 2008 financial crisis. The firm shut down after a bank run (see 101) following an announcement it had sold roughly $21B in securities at a $1.8B loss, and was seeking to raise $2.25B in capital. It faces probes from the Justice Department and the Securities and Exchange Commission. See US bank failures since 2001 here.


In related news, the Federal Deposit Insurance Corp. released an account of its own failures in the collapse of Signature Bank. The bank shut down two days after Silicon Valley Bank last month. Read the 63-page report here (scroll down, see attachment).

source:1440 Daily Digest


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