"I agree with and support his recommendations to address our rules and supervisory practices, and I am confident they will lead to a stronger and more resilient banking system." "I welcome this thorough and self-critical report on Federal Reserve supervision from Vice Chair Barr," Powell said in a statement. Tim Scott, R-S.C., the ranking Republican on the Senate Banking Committee.īut Fed chairman Jerome Powell agreed with Barr that a course correction is necessary. "We should not be punishing the many well-run financial institutions and the American public for these unique bank and supervisory failures," said Sen. Barr's more aggressive approach to bank regulation has drawn criticism from Senate Republicans.
"Following Silicon Valley Bank's failure, we must strengthen the Federal Reserve's supervision and regulation, based on what we have learned," said Michael Barr, the Fed's vice chair for supervision, who led the review.īarr took over as the Fed's top bank regulator last July, replacing Randal Quarles, who oversaw the changes made in 2019. The report says changes adopted in 2019 that exempted all but the biggest banks from strict scrutiny - along with a cultural shift towards less-assertive policing of banks - allowed problems at Silicon Valley Bank to fester until it was too late. In a scathing 114-page report, the Fed says its own supervisors were slow to grasp the extent of the problems at Silicon Valley Bank, and when problems were identified, supervisors failed to move aggressively enough to ensure those problems were fixed. The Federal Reserve says its own light-touch approach to bank regulation is partly to blame for the collapse of Silicon Valley Bank last month, and it promised more vigorous oversight in the future. The Fed admitted it was partly to blame for the collapse of the lender in a scathing report on Friday. A security guard at Silicon Valley Bank monitors a line of people outside the office in Santa Clara, Calif., on March 13, 2023.
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