Fed launches investigation into SVB’s oversight
The US Federal Reserve (Fed) announced that it will investigate the supervision of the bankrupt Silicon Valley Bank (SVB).
In the statement made by the Fed, it was stated that the result of the review, which will be led by Michael Barr, Vice President of Financial Institutions, will be published on May 1.
Fed Chairman Jerome Powellin a statement, “Events around the Silicon Valley Bank require a thorough, transparent and swift scrutiny by the Fed.” he evaluated.
Barr also “We need to be humble and carefully and thoroughly review how we oversee and regulate this firm and what we can learn from this experience.” he said.
It was noteworthy that the Fed’s review decision came after the criticisms of the Central Bank’s supervision after the bankruptcy of the SVB.
In the news in the US press, it was stated that the Joe Biden administration examined the quality of the supervision of the bank undertaken by California state officials and the San Francisco Fed.
Biggest bankruptcy since 2008
Share price had lost more than 60 percent last week after California-based SVB closed its $21 billion bond position with a loss of approximately $1.8 billion and announced that it would raise more than $2 billion in capital.
Its operations were suspended as the bank continued to lose after some venture capital investors advised companies to withdraw their money from the bank.
The US Federal Deposit Insurance Corporation (FDIC) announced on March 10 that a trustee was appointed to the SVB, which caused a decline in the markets. In the statement made by the FDIC, it was noted that the SVB was the first FDIC insured institution to go bankrupt this year.
The bankruptcy of the SVB was one of the largest recorded bankruptcies in the US since the 2008 global financial crisis. The largest such bankruptcy occurred during the 2008 crisis, when Washington Mutual went bankrupt.
SVB, the 16th largest bank in the US, often provided financing to startups and venture capitals.
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