“SVB failed because the bank’s management did not effectively manage its interest rate and liquidity risk and the bank then suffered a devastating and unexpected run by its uninsured depositors,” Fed Vice Chair Michael Barr will tell Congress Tuesday.
The Federal Reserve issued warnings to Silicon Valley Bank that its risk-management practices were deficient as early as 2021 — well over a year before the bank ultimately failed — and met with the bank’s senior management in October of last year to express concern over interest-rate risk, Fed Vice Chair Michael Barr plans to tell Congress Tuesday.
“SVB failed because the bank’s management did not effectively manage its interest rate and liquidity risk and the bank then suffered a devastating and unexpected run by its uninsured depositors,” Barr will tell the Senate Banking Committee Tuesday, according to prepared remarks. The review will also seek to determine whether supervisors “have the tools to mitigate threats to safety and soundness” and whether the “culture, policies and practices” of the Fed support effective oversight of banks, according to Barr’s prepared testimony.
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