https://sputnikglobe.com/20230314/federal-reserve-to-review-svb-collapse-after-biden-said-important-questions-remain-1108358992.html
Federal Reserve to Review SVB Collapse After Biden Said 'Important Questions' Remain
Federal Reserve to Review SVB Collapse After Biden Said 'Important Questions' Remain
Sputnik International
The Federal Reserve said it is reviewing the collapse of Silicon Valley Bank (SVB) - one of the 20 largest lenders in the United States - after President Joe Biden said "important questions" regarding the failure of the bank remained unanswered.
2023-03-14T00:02+0000
2023-03-14T00:02+0000
2023-03-14T00:01+0000
economy
silicon valley bank collapse
joe biden
federal reserve
investigation
us
finance
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"The events surrounding Silicon Valley Bank demand a thorough, transparent and swift review by the Federal Reserve," Fed Chair Jerome Powell said in a statement on Monday. Fed Vice Chair for Supervision Michael Barr, who will lead the US central bank’s review of the supervision and regulation at SVB, said the results of the probe will be publicly released by May 1. SVB is the largest US lender to fail since Washington Mutual collapsed in 2008 at the height of the financial crisis. Investors at the California-based bank withheld $42 billion in deposits last week, triggering a 60% plunge in its share prices. SVB provided financing for almost half of US venture-backed technology and health care companies. At the end of 2022, the bank said it had $151.5 billion in uninsured deposits, $137.6 billion of which was held by US depositors. Its total assets as of the end of last year were $209 billion. The Federal Deposit Insurance Corporation, or FDIC, took charge of SVB at the weekend. The FDIC also took control of Signature, which had $110.36 billion in assets and $88.59 billion in deposits at the end of last year, according to New York State's Department of Financial Services. Earlier on Monday, Biden promised the US government would take action against reckless risk taking by financial firms. Biden said the FDIC protection for depositors at the SVB and Signature banks will not be extended to investors and the management at the collapsed banks. "That's how capitalism works and so forth. But there are very important questions of how these banks got into the circumstances in the first place. We must get the full accounting of what happened, and why those responsible can be held accountable. In my administration, no one is above the law," he underscored.Meanwhile, shareholders have filed a class-action lawsuit against SVB, its Chief Executive Greg Becker and Chief Financial Officer Daniel Beck in the federal court in San Jose, California. The suit was filed by a single plaintiff, identified as Chandra Vanipenta, who represents "all other persons similarly situated" by the collapse of the bank, according to court documents on the case. The language in the class-action lawsuit accuses the SVB management of issuing misleading guidance to investors even as it knew the extent of the troubles at the bank. SVB Chief Executive Officer Greg Becker held a conference call with the bank’s clients, including venture capital investors, last week, urging them to stay calm to try and avoid a run on the bank’s deposits.
https://sputnikglobe.com/20230313/svb-reportedly-paid-hefty-bonus-to-employees-on-day-of-fdic-takeover-1108354381.html
https://sputnikglobe.com/20230313/biden-fails-to-quell-fears-of-svb-contagion-with-us-investors-hit-hard-ex-bank-gov-says-1108351236.html
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federal reserve, silicon valley bank, joe biden, review, svb collapse
federal reserve, silicon valley bank, joe biden, review, svb collapse
Federal Reserve to Review SVB Collapse After Biden Said 'Important Questions' Remain
WASHINGTON (Sputnik) - The Federal Reserve said it is reviewing the collapse of Silicon Valley Bank (SVB) - one of the 20 largest lenders in the United States - after President Joe Biden said "important questions" regarding the failure of the bank remained unanswered.
"The events surrounding Silicon Valley Bank demand a thorough, transparent and swift review by the Federal Reserve," Fed Chair Jerome Powell said in a statement on Monday.
Fed Vice Chair for Supervision Michael Barr, who will lead the US central bank’s review of the supervision and regulation at SVB, said the results of the probe will be publicly released by May 1.
"We need to have humility and conduct a careful and thorough review of how we supervised and regulated this firm, and what we should learn from this experience," Barr said in the same statement.
SVB is the largest US lender to fail since Washington Mutual collapsed in 2008 at the height of the financial crisis. Investors at the California-based bank withheld $42 billion in deposits last week, triggering a 60% plunge in its share prices.
SVB provided financing for almost half of US venture-backed technology and health care companies. At the end of 2022, the bank said it had $151.5 billion in uninsured deposits, $137.6 billion of which was held by US depositors. Its total assets as of the end of last year were $209 billion.
The Federal Deposit Insurance Corporation, or FDIC, took charge of SVB at the weekend.
The FDIC also took control of Signature, which had $110.36 billion in assets and $88.59 billion in deposits at the end of last year, according to New York State's Department of Financial Services.
Earlier on Monday, Biden promised the US government would take action against reckless risk taking by financial firms. Biden said the FDIC protection for depositors at the SVB and Signature banks will not be extended to investors and the management at the collapsed banks.
"The management of these banks will be fired," Biden said. "If the bank is taken over by FDIC, the people running the bank should not work there anymore. Investors in the banks will not be protected. They knowingly took a risk and when the risk didn't pay off, investors lost their money."
"That's how capitalism works and so forth. But there are very important questions of how these banks got into the circumstances in the first place. We must get the full accounting of what happened, and why those responsible can be held accountable. In my administration, no one is above the law," he underscored.
Meanwhile, shareholders have filed a class-action lawsuit against SVB, its Chief Executive Greg Becker and Chief Financial Officer Daniel Beck in the federal court in San Jose, California. The suit was filed by a single plaintiff, identified as Chandra Vanipenta, who represents "all other persons similarly situated" by the collapse of the bank, according to court documents on the case.
The language in the class-action lawsuit accuses the SVB management of issuing misleading guidance to investors even as it knew the extent of the troubles at the bank.
SVB Chief Executive Officer Greg Becker held a conference call with the bank’s clients, including venture capital investors, last week, urging them to stay calm to try and avoid a run on the bank’s deposits.
