The top banking regulator at the Federal Reserve told Congress Tuesday that Silicon Valley Bank failed due to mismanagement, while lawmakers on the Senate Banking Committee blamed federal regulators for being caught flat-footed by the nation’s second-largest bank collapse.
Michael Barr, the Fed’s vice chairman for banking supervision, said mismanagement at SVB was the primary cause for its collapse on March 10. He also told lawmakers that the run on the bank was larger than first reported, with depositors trying to withdraw $142 billion over two days.
“It looks to me like the regulators knew the problem but nobody dropped the hammer,” said Sen. Jon Tester, Montana Democrat. The failure of SVB, which had assets late last year of $209 billion, and of Signature Bank in New York led to widespread concerns about the safety of deposits at banks nationwide. The Fed, the FDIC and the Treasury Department worked out an emergency deal to guarantee customers’ deposits beyond the normal $250,000 limit.
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