US lawmakers slam regulators for Silicon Valley Bank oversight failures

Washington, United States: US lawmakers accused regulators Tuesday of failing to do enough to prevent the collapse of Silicon Valley Bank earlier this month, despite knowing it was over-exposed to the risk of rising interest rates. The Senate Banking Committee grilled senior Federal Reserve, Treasury and Federal Deposit Insurance Corporation (FDIC) officials about their inability to prevent the collapse of the Californian lender on 10 March. Fed vice chair for supervision Michael Barr said SVB failed “because the bank’s management did not effectively manage its interest rate and liquidity risk,” calling the collapse a “textbook case of mismanagement.” Barr, FDIC chair Martin Gruenberg and Treasury undersecretary for domestic finance Nellie Liang faced questions from the bipartisan committee of lawmakers on the extent to which they could have prevented SVB’s failure. The bank’s collapse sparked a broader sell-off of banking stocks by concerned investors which led to the fall of another regional lender, Signature Bank, and the merger under the pressure of Swiss banking giant Credit Suisse. “You did not have to be an accountant to figure out what the hell was going on,” Democratic Senator Jon Tester said during one exchange. He added: “It looks to me like the regulators knew the problem but nobody dropped the hammer.” “In spite of all the preparation and tools at your disposal, the FDIC failed to do its job,” Republican Bill Hagerty said during the hearing. For their part, Fed’s Barr and the FDIC’s Gruenberg said they were investigating any failings they may have made in their oversight of SVB prior to its collapse and would publish their findings by 1 May. Barr added that “no limitations” would be placed on Fed staff members as they conduct their review into the US central bank’s supervision and oversight of the firm. Gruenberg said the FDIC was also examining the deposit insurance system in light of the decision by regulators to make uninsured depositors whole after SVB’s demise. “The decision to cover uninsured depositors at these two institutions was a highly consequential one,” Gruenberg said. He added that the FDIC would conduct “a comprehensive review” of its deposit insurance system by 1 May. By law, the FDIC insures up to $250,000 of customers’ deposits in eligible banks. But regulators took the controversial decision to support SVB and Signature Bank’s uninsured deposits earlier this month, citing fears of contagion. Read all the Latest News , Trending News ,  Cricket News , Bollywood News , India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.