Comer, McClain Probe FDIC’s Role in SVB Collapse

WASHINGTON—House Committee on Oversight and Accountability Chairman James Comer (R-Ky.) and Subcommittee on Health Care and Financial Services Chair Lisa McClain (R-Mich.) are today furthering an investigation into the 2023 Silicon Valley Bank (SVB) collapse and the San Francisco Federal Reserve’s failed supervision that enabled the collapse. In a letter to the Chair of the Federal Deposit Insurance Corporation (FDIC), the lawmakers are requesting documents and communications related to the FDIC’s role in the collapse.

“In early 2023, SVB’s financial condition deteriorated rapidly, with its eventual demise resulting in one of the largest bank failures in United States history. As the agency charged ‘to maintain stability and public confidence in the nation’s financial system ‘ and ‘mak[ing] large and complex financial institutions resolvable and manag[ing] receiverships,’  the FDIC played a key role in managing the run up to and aftermath of SVB’s collapse. While the leadership at SVB clearly has a key responsibility in the mismanagement of the firm, Federal regulators also appear to have failed at many levels,” the lawmakers wrote.

Chairman Comer and Subcommittee Chairwoman McClain have previously sent requests for information to the SF Fed President and the Federal Reserve Board to obtain a better understanding of the collapse of SVB. On May 22, 2023, the SF Fed provided documents which included a brief overview of the Federal Reserve System, along with a copy of the Board’s postmortem Review of the Federal Reserve Supervision of Silicon Valley Bank. The information provided was already publicly available and failed to satisfy the Committee’s request. On June 1, 2023, Committee staff met with Fed Board staff to discuss the Committee’s concerns and Fed Board staff has been cooperating by turning over non-public materials and documents. The Health Care and Financial Services Subcommittee held a hearing on the SVB collapse in May 2023.

“…in July 2021, President Biden issued Executive Order 14036, which initiated a whole of government review of mergers, including bank mergers.  Specific to financial services, the President’s E.O. directed agencies to ‘resist consolidation’ and specifically mentioned the FDIC as an agency that has similar authority. Press reports and documents reviewed by Committee raise questions as to the credibility of statements that there were no buyers contemplating an acquisition. The Committee’s investigation will help determine the truthfulness of these statements as well as determine if the Biden E.O. pressured the FDIC to abandon one of the most efficient and effective methods to resolve failing institutions,” the lawmakers continued.

Read the letter to FDIC Chair Gruenberg here.