From Breakingviews: The death of Silicon Valley Bank is a whodunnit with many perpetrators, according to a review conducted by the Fed. So many, in fact, that the report makes it hard to point the blame anywhere in particular, writes johnsfoley
First Citizens BancShares and SVB logos are seen in this illustration taken March 19, 2023. REUTERS/Dado Ruvic/Illustration
The 114-page post-mortem of SVB, compiled in just over six weeks at the behest of supervisory chief Michael Barr, points out some obvious but undeniable truths. Chief among them: SVB was horribly mismanaged, amassing large deposits from a concentrated base of technology firms, and reinvesting them such that rising interest rates tore its balance sheet to shreds, provoking a bank run.
If one individual gets subtly thrown under the bus, it’s Barr’s predecessor, Republican appointee Randal Quarles. Supervisors felt pressure to ease the “burden” on firms during his tenure, making them less willing to take tough action. Barr, by contrast, shows no such tendencies. He is already reviewing whether banks require more capital, and mulling tougher rules for large regional banks.
Vice Chair Michael Barr, who heads supervision of banks at the Fed, said that while SVB was a “textbook case” of mismanagement, supervisors also failed to take forceful enough action.
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