Senate Republicans are calling on Federal Reserve Chairman Jerome Powell and San Francisco Fed President Mary Daly for more information about their oversight of Silicon Valley Bank leading up to the bank’s failure.
SVB, a bank used by technology startups, collapsed on March 10 after announcing it was trying to raise money. This spurred clients to withdraw their funds, which the bank could not cover. California regulators seized SVB, with the federal government stepping in to guarantee the money held at the bank. The Fed was aware of the bank’s risky practices more than a year before its collapse, the New York Times reported.
In response, Senate Republicans on the Banking Committee sent a letter to Powell and Daly, laying out 12 separate requests for information, including examination reports on SVB and the calendar entries of bank examiners, Daly, and members of the Fed Board in Washington by no later than April 6.
“It is apparent that the Federal Reserve supervisors and examiners neglected to intervene in a meaningful, appropriate way to rectify the bank’s deficiencies, ensure safe and sound operations, and prevent its ultimate failure,” the senators wrote in the letter.
“The American people deserve transparency and accountability from their government officials, and they are entitled to understand precisely what Federal Reserve officials knew about the apparent risks associated with SVB, when they knew it, and why they failed to act to prevent the bank failure from occurring,” they added.
The outrage on Capitol Hill is bipartisan, with Democrats also looking for answers. House Financial Services Chairman Patrick McHenry (R-NC) and ranking member Maxine Waters (D-CA) are calling for a Government Accountability Office investigation. Sen. Elizabeth Warren (D-MA) has been critical of Powell and the Fed’s former vice chairman for supervision, Randal Quarles, for failing to conduct proper oversight in the wake of the bank’s failure.
Warren and Sen. Rick Scott (R-FL) introduced bipartisan legislation to require a presidentially appointed and Senate-confirmed inspector general to the Fed and the Bureau of Consumer Financial Protection to provide reforms to the system.