The U.S. Federal Reserve has officially stated that they are currently assessing the oversight of the bankruptcy case of the Silicon Valley bank in the middle of all the headlines around the recent collapse of the Silicon Valley Bank. Jerome Powell, the chairman of the FED, claimed that the aforementioned collapse had sparked a wave of worry about the financial sector.
In addition, the aforementioned chairman has asked for a “thorough, transparent, and prompt review” of the issue. According to reports, Michael Barr, the Vice Chairman for Supervision of the FED, will oversee the examination, and the findings will reportedly be made public by May 1. Barr has indicated that humility must be practiced; as a result, they must carefully examine how they intended to supervise and regulate the aforementioned bank and what the industry may learn from this experience.
The Root Cause of the Silicon Valley Bank Investigation
The purported FED initiative is said to have its roots in authorities’ concern about how the Silicon Valley Bank, which reportedly failed just days after declaring that it needed to borrow capital to shore up its finances, stoked anxiety throughout the banking system.
According to reports, the aforementioned regulators were compelled to make the relief announcement last Sunday in order to convince the clients that all deposits from both that bank and the New York-based Signature Bank, which was shut down by regulators on Sunday, would be covered. Also, the FED has announced a new facility to allow banks access to emergency money in an effort to soothe the growing panic in the market.
Results of the Review
While politicians in Washington begin to consider what adjustments could be necessary to stop future bank runs, the review has reportedly advised the FED, which was purportedly the principal regulator of the Silicon Valley Bank, to reconsider its existing regulations.
According to the stated policy, the Fed would purportedly have direct supervision over banks with assets of exceeding $100 billion, with Fed staff and governors in Washington determining the scope of that supervision. Supervisors from several Fed regional banks are in charge of the actual day-to-day surveillance. The Federal Reserve Bank of San Francisco was in charge of overseeing Silicon Valley Bank.
