(Original title: The “Accountability Conference” of the Silicon Valley Bank case was unveiled: the Federal Reserve intends to strengthen supervision and emphasizes that the bank is at fault)
News from the Financial Associated Press on March 29 (edited by Shi Zhengcheng)Martin Grunberg, chairman of the Federal Deposit Insurance Corporation, Michael Barr, vice chairman of the Federal Reserve, and Nellie Liang, deputy secretary of the domestic finance department of the U.S. Treasury Department, attended the hearing of the Senate Banking Committee on Tuesday local time to accept lawmakers’ comments on the bankruptcy of Silicon Valley Bank. query.
As the core topic of today’s discussion,Is there any dereliction of duty in the US financial supervision in the case of Silicon Valley Bank?is naturally the focus of repeated pulls by all parties.
In the testimony of Barr, the vice chairman of the Federal Reserve Supervision, it was mentioned that the Federal Reserve had discovered flaws in the liquidity risk management of Silicon Valley Bank at the end of 2021, and raised the issue of board supervision, risk control shortcomings and internal audit issues of the bank in May last year. question. In October last year, the regulatory authorities directly interviewed the bank’s management and clearly raised concerns about interest rate risk management.
In response, Senator Jon Tester noted that it appearsRegulators always knew there was a problem, but no one was going to fix it。
Regarding the accusations from all parties, Barr pointed the finger at the bank’s management, emphasizing that Silicon Valley Bank did not even have a chief risk control officer for several months, and that the bank’s modeling of interest rate risk was “completely unrealistic.”The Fed has raised these issues with the bank’s management, but they have chosen to ignore them。
Barr also revealed that he himself first learned that Silicon Valley Bank had interest rate risk in mid-February this year. While the Fed tried to help Silicon Valley Bank deal with the risk of a run when it happened in early March, the situation facing the bank is more dire than previously disclosed. After customers withdrew $42 billion in deposits on March 9,On the morning of the 10th, the bank informed the regulators that the amount waiting in line for withdrawals reached 100 billion U.S. dollars, so the bank would not be able to open its doors on Friday.。
Grunberg, chairman of the FDIC, also explained the refusal of the acquisition offer over the weekend. He said that one of the offers lacked legal force because there was no board approval, and the other offer had more potential losses to the FDIC than the direct liquidation of Silicon Valley Bank. There are even more assets.
Therefore, the three financial regulators had to quote systemic risk exceptions on that weekend to make full redemption of funds exceeding the deposit insurance limit of the two bankrupt banks.
Since Silicon Valley Bank is one of the biggest beneficiaries of the deregulation of the banking industry during the Trump era, congressmen who are particularly energetic in the face of the issue of “congressional infighting” also quickly stood up. Elizabeth Warren on the Democratic side accused Trump’s reforms of causing today’s catastrophe, while Republican lawmakers including Tom Tillis worried that some healthy banks would also be affected by tightening regulations.
Barr stated that,The Fed may impose stricter capital and liquidity standards on banks with more than $100 billion in assets. He also admitted that the Fed’s recent stress tests have not covered banks’ performance in responding to interest rate hikes, and will expand tests in this area in the future.
On this front, Grunberg, who had previously voted against the reform, was under much less pressure, and he also stressed that his position on the issue had not changed.
Today’s hearing is also the first in a series of hearings on the bankruptcy case of Silicon Valley Bank, and similar hearings will be held in the House of Representatives next. Lawmakers are also now seeking testimony from top executives at failed banks. However, due to the bickering nature of congressional hearings, the performance of lawmakers has relatively limited impact on the stock market.