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Senators grill federal officials over lack of oversight into SVB, Signature Bank collapse

Press Releases Crypto News CryptoSlate Senators grill federal officials over lack of oversight into SVB, Signature Bank collapse

In a closely watched Senate hearing held on Mar 28, regarding the collapse of crypto-friendly banks Silicon Valley Bank (SVB) and Signature Bank, William Barr, a top official at the US Federal Reserve, acknowledged the potential benefits of testing for higher rates and expressed his plans to broaden the scope of future tests.

During the Senate panel hearing, the high-ranking U.S. regulator defended bank watchdogs from lawmakers who blamed them for not detecting the warning signs leading to the collapse of SVB.

“A textbook case of mismanagement”

Speaking to the hearing, Barr stated that the bank had done a “terrible” job in managing risk before its downfall and that its shutter was a “textbook case of mismanagement.”

“It was a rapid failure,” added Martin Gruenberg, Chairman of the Federal Deposit Insurance Corporation, known as the FDIC, when pressed by the myriad of Senators as to the reasons why neither had caught or warned about the collapse.

Senator Warnock from Georgia repeated the allegation that several top executives from within the bank cashed out of stocks worth millions of dollars just weeks prior to SVB’s collapse and that widespread oversight failure was actually baked into the system.

Others pressed the officials on the lack of oversight either on the part of the FDIC or the Fed itself, with Senators assessing the health of each bank prior to its collapse, but also more broadly that of the institutions meant to supervise them–the FDIC and Fed itself.

Dodd-Frank Act a recurring theme

The Dodd-Frank Wall Street Reform and Consumer Protection Act, commonly called Dodd-Frank, was enacted by Congress in 2010. The law was introduced as a response to the 2008 financial crisis to increase transparency and accountability, promote financial stability, and protect consumers from abusive practices

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Author: Dorian Batycka

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