(Original title: Silicon Valley Bank case “Accountability Conference” unveiled: Federal Reserve plans to strengthen oversight and emphasizes bank is to blame)
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, under secretary of the domestic finance division of the US Treasury Department, attended a hearing by the Senate Banking Committee on Tuesday local time to receive comments lawmakers on the bankruptcy of Silicon Valley Bank.
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?naturally a center of attraction again and again by all parties.
In the testimony of Barr, vice-chairman of 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 the issue of board supervision, risk management was raised. deficiencies and the bank’s internal audit issues in May last year. In October last year, the regulatory authorities interviewed the bank’s management directly 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.
As for the accusations from all parties, Barr pointed to the bank’s management, stressing that Silicon Valley Bank did not even have a chief risk management officer for several months, and that the bank’s model 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 an interest rate risk in mid-February this year. Although 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 revealed. After customers withdrew $42 billion in deposits on March 9,On the morning of the 10th, the bank informed regulators that the amount pending in line for withdrawal had reached 100 billion US dollars, so the bank would not be able to open its doors on Friday..
Grunberg, the chairman of the FDIC, also explained the rejection of the acquisition proposal over the weekend. He said that one of the proposals lacked legal force because there was no board approval, and the other proposal had more potential losses for the FDIC than The direct liquidation of Silicon Valley Bank has even more assets.
Therefore, the three financial regulators had to cite systemic risk exemptions that weekend to make a full buyback of funds that exceeded the deposit insurance limit of the two bankrupt banks.
Since Silicon Valley Bank was one of the biggest beneficiaries of the deregulation of the banking industry during the Trump era, congressmen who are particularly active in the face of the issue of “congressional fighting” were also rising rapidly. Elizabeth Warren on the Democratic side accused Trump’s reforms of causing disaster today, while Republican lawmakers including Tom Tillis worried that some healthy banks would also be affected by tightening regulations.
Barr said,The Fed can 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 rises, 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 emphasized that his position on the matter had not changed.
Today’s hearing is also the first in a series of hearings on the Silicon Valley Bank bankruptcy case, and similar hearings will be held in the next House of Representatives. Lawmakers are also now seeking evidence from top executives at failed banks. However, due to the contentious nature of congressional hearings, lawmakers’ performance has a relatively limited impact on the stock market.