US Fed admits faults and calls for stronger banking oversight after SVB collapse | World News - Hindustan Times
close_game
close_game

US Federal Reserve admits faults and calls for stronger banking oversight after Silicon Valley Bank collapse

AFP |
Apr 28, 2023 10:03 PM IST

The Fed will also look to strengthen the regulatory framework for banks, and consider toughening the rules

The US Federal Reserve called for greater banking oversight while admitting to its own failures in a widely-anticipated report published Friday into the collapse of Silicon Valley Bank (SVB) last month.

US Federal Reserve admits to failings in Silicon Valley Bank oversight
US Federal Reserve admits to failings in Silicon Valley Bank oversight

"Following Silicon Valley Bank's failure, we must strengthen the Federal Reserve's supervision and regulation based on what we have learned," Federal Reserve vice chair for supervision Michael Barr said in a statement accompanying the report.

Unlock exclusive access to the latest news on India's general elections, only on the HT App. Download Now! Download Now!

Barr said SVB's management failed to adequately manage risk prior to the bank's swift collapse, while Fed supervisors failed to take forceful enough action after they had identified issues at the Californmian high-tech lender.

SVB's failure on March 10 after taking on too much interest-rate risk caused shock waves throughout the banking sector, and led to the failure of another regional US bank and the merger under pressure of Swiss investment banking giant Credit Suisse.

Concerted efforts by regulators on both sides of the Atlantic in the days that followed SVB's collapse appear to have reduced the banking turmoil and lowered volatility in the financial markets.

The report found that the Fed "did not appreciate the seriousness of critical deficiencies in the firm's governance, liquidity, and interest rate risk management," as SVB's assets more than doubled in size between 2019-2021 in the middle of a high-tech boom.

In response, Barr said the Fed will look at strengthening banking supervision to ensure the Fed could more quickly identify risks and vulnerabilities.

The Fed will also look to strengthen the regulatory framework for banks, and consider toughening the rules around interest-rate risk, liquidity and capital requirements, and stress-testing.

The review will be far-reaching and look more broadly at the Fed's liquidity and capital rules, a senior Fed official told reporters prior to the report's release.

Fed chair Jerome Powell said in a statement that he welcomed Barr's "self-critical" report into SVB's collapse.

"I agree with and support his recommendations to address our rules and supervisory practices, and I am confident they will lead to a stronger and more resilient banking system," he said.

Tell us what your First Vote will stand for in a short video & get a chance to be featured on HT’s social media handles. Click here to know more!

Get Current Updates on India News, Elections 2024, Lok sabha election 2024 voting live , Karnataka election 2024 live in Bengaluru , Election 2024 Date along with Latest News and Top Headlines from India and around the world.
SHARE THIS ARTICLE ON
Share this article
SHARE
Story Saved
Live Score
OPEN APP
Saved Articles
Following
My Reads
Sign out
New Delhi 0C
Saturday, May 18, 2024
Start 14 Days Free Trial Subscribe Now
Follow Us On