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Reports by FDIC, Fed cast blame on regulators and Silicon Valley Bank for lender's collapse

Silicon Valley Bank, then New York-based Signature Bank failed in March.

Published: April 28, 2023 3:10pm

Several reports released Friday cast blame on the Federal Reserve and the Silicon Valley Bank for the lending institution's recent collapse – including a report for the central bank itself.

The Fed report was compiled by Michael Barr, the central banks chief regulator, and concluded banking supervisors were slow to recognize burgeoning problems at Silicon Valley Bank as it rapidly grew in the years leading up to its collapse last month.

The report also argues there is an underlying cultural issues at the Fed in which supervisors are unwilling to be hard on bank management when they saw growing problems, according to the Associated Press

Such issues appear related to legislation passed in 2018 that tried to lighten regulation for banks with less than $250 billion in assets, the report concluded.

Silicon Valley Bank and New York-based Signature Bank, which also failed in March, had assets below that level.

Separate reports released Friday – by the Federal Deposit Insurance Corp. and the Government Accountability Office, the investigative arm of Congress – also faulted the Fed and other regulators for a lack of urgency regarding Silicon Valley’s deficiencies, the wire service also reports

The FDIC’s report focused on Signature Bank failing March 12 and its exposure to cryptocurrencies and an over-reliance on uninsured deposits. But the agency also found its own regulatory deficiencies, including insufficient staffing to adequately supervise Signature Bank, which was based in New York, also according to the Associated Press.