March 28 (Reuters) – The U.S. Federal Reserve’s head of banking supervision mentioned Tuesday he was first made conscious of the rate of interest risk-related points at Silicon Valley Financial institution in mid-February, simply weeks earlier than its failure.
Fed Vice Chairman for Supervision Michael Barr advised the Senate Banking Committee that Fed employees made a presentation to the central financial institution’s board in mid-February wherein employees indicated they have been following up with SVB on threat associated to rising rates of interest.
“The employees highlighted the interest-rate threat that was current at Silicon Valley Financial institution and indicated that they have been in the midst of an extra evaluate,” Barr mentioned.
“I imagine that’s the first time that I used to be advised about interest-rate threat at Silicon Valley Financial institution.”
Supervisory employees on the Fed had beforehand raised critical issues over SVB’s interest-rate threat and liquidity administration and demanded fixes from the financial institution in November 2021, Barr mentioned.
In mid-2022, Fed employees deemed the financial institution’s administration to be poor and barred the financial institution from rising by way of mergers or acquisitions, Barr mentioned.
Fed supervisors introduced these points to SVB’s chief monetary officer in October 2022, he mentioned, and raised extra issues to SVB administration in November.
However Barr mentioned the problems weren’t dropped at his consideration till a employees presentation final month.
“To one of the best of my data I first realized in regards to the points at Silicon Valley Financial institution with respect to rate of interest threat in mid-February of 2023,” Barr mentioned.
Reporting by Hannah Lang in Washington, enhancing by Deepa Babington
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