Banking experts have been among those alarmed at the rapid collapse of Silicon Valley Bank, the United States' 16th biggest bank by assets and how its demise became a harbinger of Sunday's failure of another lender, Signature Bank.
People line up outside of the shuttered Silicon Valley Bank headquarters on March 10, 2023 in Santa Clara, California. Silicon Valley Bank was shut down on Friday by California regulators and was put in control of the US Federal Deposit Insurance Corporation. Justin Sullivan/Getty Images/AFP
The Federal Reserve announced Monday plans for a "thorough, transparent and swift" review of the supervision of SVB that will be publicly released on May 1, effectively acknowledging that it could have done better. The failures have "exposed the inadequacy of regulatory reforms that have been made since the global financial crisis," said Arthur Wilmarth, a law professor at George Washington University.
"That's almost a sure proof formula for failure. If the economy turns you begin to have trouble," Wilmarth said.Experts pointed as well to the eventual easing of US laws enacted soon after the 2008 crisis. But that shift in law does not excuse regulators for these failures, according to Anna Gelpern, a law professor at Georgetown University.
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