Federal Reserve Vice Chair for Supervision Michael Barr testifies to Congress on Tuesday about the failure of Silicon Valley Bank. He says SVB suffered from
“textbook” mismanagement.
That sounds bad for SVB, but might look even worse for the Fed and other regulators. If the bank was making obvious mistakes, why didn’t anyone notice before it was too late.
One challenge for regulators is to anticipate future problems and not always be fighting the last war. That may be what happened with SVB–the Treasuries that the bank loaded up on backfired on them when interest rates rose, which is a fresh problem.
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