The Federal Reserve is to conduct an internal investigation into its oversight of Silicon Valley Bank (SVB) in the run-up to the bank’s failure. Fed Chair Jerome Powell said the events surrounding SVB “demand a thorough, transparent and timely review by the Federal Reserve,” he said in a statement.
US Federal Reserve Vice Chairman Michael Barr will lead the investigation. The results will be announced on May 1. Barr argues that regulators should “be humble” and “learn from the experience.”
Stricter rules
US President Joe Biden pushed for tougher rules for banks on Monday. He also scrutinized the supervisors. According to Biden it is important to ensure that problems do not repeat themselves. “We won’t stop there, we will do whatever it takes.”
SVB had borrowed when interest rates were low, but now that interest rates have risen sharply in recent months, the bank has struggled to refinance its loans. As a result, the major financier of, among others, start-ups in the technology sector ran into financial problems. SVB was shut down by California authorities on Friday after it failed to raise funds through new stock issuance.
Warranties
The American authorities have now taken over SVB and guarantee that customers will recover all their credit. They also took action at industry peer Signature Bank by shutting down the New York crypto bank. Customers of this bank, like customers of SVB, will get all their credit back.
Source: BNR
Andrew Dwight is an author and economy journalist who writes for 24 News Globe. He has a deep understanding of financial markets and a passion for analyzing economic trends and news. With a talent for breaking down complex economic concepts into easily understandable terms, Andrew has become a respected voice in the field of economics journalism.
