“Fed has known about risks at Silicon Valley Bank for over a year”

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“Fed has known about risks at Silicon Valley Bank for over a year”

The Federal Reserve has known about problems at Silicon Valley Bank for over a year. That reports Bloomberg. The Fed is said to have launched an investigation into the now-fallen bank more than a year ago. They discovered several shortcomings and reported this to the bank.

The San Francisco Fed would have launched an investigation into the now-fallen bank a year ago. (Tony Webster/Flickr)

In the spring of 2022, the Fed of San Francisco, where the SVB is located, would have assembled a research team. That team had to monitor the bank and discovered several problems.

Formal warnings followed to the bank’s management, Bloomberg reports. The bank had to improve the way it monitors interest rate risks, the Fed warned late last year. Insufficient hedging of interest rate risks was an important factor in the collapse of the bank, as it turned out this week.

Stress tests

Major banks in America must undergo annual stress tests. Banks with less than $250 billion in assets are under less scrutiny in the US. Silicon Valley Bank had $220 billion on its balance sheet at the beginning of last year.

Earlier this week, the Fed announced that it would conduct an internal investigation into whether supervision of the tech bank was adequate in the run-up to the bankruptcy. The results of that study are expected on May 1. The collapse of SVB calls for “a thorough, transparent and prompt review by the Federal Reserve,” Fed Chairman Jerome Powell said in a statement.

The Fed declined to comment on questions from Bloomberg.


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