WASHINGTON—House Committee on Oversight and Accountability Chairman James Comer (R-Ky.) and Subcommittee on Health Care and Financial Services Chairwoman Lisa McClain (R-Mich.) today opened an investigation into the role the Federal Reserve Bank of San Francisco (SF Fed) and other state and federal regulators played in the Silicon Valley Bank (SVB) collapse. In a letter to the President and CEO of the Federal Reserve Bank of San Francisco, the lawmakers are requesting documents and information related to SF Fed’s oversight of SVB.
“The Committee on Oversight and Accountability is investigating the role the Federal Reserve Bank of San Francisco (SF Fed) and other state and federal regulators played in the March 2023 failure of Silicon Valley Bank (SVB). SF Fed appears to have failed to adequately supervise SVB and respond to the bank’s mismanagement, ultimately leading to SVB’s seizure by federal regulators—the second largest bank failure in U.S. history—and threatening a panic in our banking system. We request documents and information related to the SF Fed’s oversight of SVB,” the lawmakers wrote.
The Oversight Committee is investigating the circumstances that led to the Silicon Valley Bank’s collapse to hold relevant actors accountable and ensure Americans’ banking systems are secure. The Committee is concerned about whether the SF Fed allowed any factors to impact its enforcement of regulations.
“The SF Fed reportedly filed at least six Matters Requiring Attention (MRA) or Matters Requiring Immediate Attention (MRIA) against SVB, citations meant to highlight issues of concern but which do not require action by the bank. These warnings, dating back to at least November 2021, are not public and reports outline that SVB was under full supervisory review by the SF Fed as early as July 2022. Public documents show that SVB’s assets and liabilities were not appropriately diversified to match the bank’s growth and regulators filing MRAs and MRIAs may have been responding to knowledge that, at the end of 2022, almost 96 percent of deposits held at SVB were uninsured, making the bank susceptible to a run. While the signs of significant and alarming risk were clear, no regulator used more severe tools, such as fines or consent orders, to require action from SVB,” the lawmakers continued.
Read the letter to Mary Daly, President and Chief Executive Officer at the Federal Reserve Bank of San Francisco, here.