In a hotly anticipated report released Friday morning, the Fed, which is SVB’s primary regulator, took responsibility for its own lapses, saying that supervisors “did not fully appreciate the extent of the vulnerabilities as Silicon Valley Bank grew in size and complexity” and “did not take sufficient steps” to ensure that SVB address its problems quickly. It recommended a sweeping re-evaluation of its regulatory and supervisory functions.
“Following Silicon Valley Bank’s failure, we must strengthen the Federal Reserve’s supervision and regulation based on what we have learned,” said Michael Barr, the Fed’s vice chair for supervision. “This review represents a first step in that process.” At the time of its failure, SVB had 31 unaddressed “safe and soundness supervisory warnings” — triple the average number of peer banks, the Fed said in a press release. This story is developing. It will be updated.