Thursday, May 30, 2024

Kennedy, Banking Republicans seek answers from Federal Reserve about SVB mismanagement

by BIZ Magazine

MADISONVILLE, La. – Sen. John Kennedy (R-La.), a member of the Senate Banking Committee, joined Ranking Member Sen. Tim Scott (R-S.C.) in seeking further information from the Federal Reserve System, including the Board of Governors, and the Federal Reserve Bank of San Francisco about the mismanagement of Silicon Valley Bank (SVB) and its collapse.

“From publicly available information, it is now well understood that SVB suffered from rampant mismanagement, ultimately resulting in its catastrophic failure. Even more concerning, however, is the apparent failure of SVB’s regulators, including the Federal Reserve, the primary federal regulator responsible for examining and supervising SVB, to ensure that the bank operated in a safe and sound manner,” the senators wrote.

“Rather than effectively directing SVB management to take definitive, corrective action, 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,” they continued.

The lawmakers are seeking a response regarding their concerns about the collapse of SVB by no later than April 6, 2023.

“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 expressed.

Sens. Mike Crapo (R-Idaho), Mike Rounds (R-S.D.), Thom Tillis (R-N.C.), Bill Hagerty (R-Tenn.), Cynthia Lummis (R-Wyo.), J.D. Vance (R-Ohio), Katie Britt (R-Ala.), Kevin Cramer (R-N.D.) and Steve Daines (R-Mont.) also signed the letter.

The full letter is available here.

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