The US Federal Reserve (Fed) announced on Monday that it would examine the supervisory and regulatory conditions of California’s Silicon Valley Bank (SVB), whose insolvency caused a shock wave on world markets.
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“Events surrounding the Silicon Valley bank require thorough, transparent and timely analysis by the Federal Reserve,” Fed Chair Jerome Powell was quoted as saying in the statement.
The results will be published on May 1st.
“We have to be humble and conduct a careful and thorough review of how we have overseen and regulated this company and what we should learn from that experience,” said the institution’s vice president for banking regulation, Michael Barr.
The Federal Reserve, according to its website, is responsible for monitoring, inspecting, and auditing certain financial institutions “to ensure they are complying with rules and regulations and operating in a safe and sound manner.”
Michael Barr, appointed by Joe Biden to the key post of vice president responsible for overseeing this sector, joined the Fed last July.
He was one of the main architects of the Dodd-Frank Act, which was passed after the 2008-2009 financial crisis to better regulate the activities of major American banking institutions.
Former President Donald Trump relaxed these regulations in 2018.
A wave of bank withdrawals last week caused the collapse of three American banks, including SVB, which could no longer cope with massive withdrawals from its customers and was shut down by American authorities on Friday.
The latter announced on Sunday a series of measures to reassure individuals and companies of the soundness of the American banking system, and in particular to guarantee the withdrawal of all deposits from the SVB.