Fed Slams Its Own Oversight of Silicon Valley Bank in Post-Mortem

[BidenPresident]

WASHINGTON — The Federal Reserve on Friday faulted itself for failing to “take forceful enough action” to address growing risks at Silicon Valley Bank ahead of the lender’s March 10 collapse.

A sweeping — and highly critical — review conducted by Michael S. Barr, the Fed’s vice chair for supervision, identified lax oversight of the bank and said its collapse demonstrated “weaknesses in regulation and supervision that must be addressed.”

https://www.nytimes.com/2023/04/28/business/economy/fed-silicon-valley-bank-failure-review.html

 

[Walt]

It is a subtle problem. If there is no run on the bank, and all bonds mature, then everything is extremely solvent. If there is a run on the bank, and bonds have to be sold, it is a disaster. We are still trying to figure out how to audit for that.