Fed's Michael Barr: Our banking system is sound and resilient
Got some breaking headlines from Fed Vice Chair for Supervision Michael Barr. Steve Leesman's got it. Hey Steve. Hey Carl, yeah, Vice Chair for Supervision Michael Barr saying the Fed is evaluating whether the application of more stringent standards would have prompted the bank to better manage the risks that led to its failure. And just by way of context, he's talking a lot about right there the 2019 changes to the Dodd-Frank Act. And he does seem to suggest that perhaps had those changes not been made, now I will tell you that some of the banking industry disagree with this, but Barr is suggesting maybe that had these changes not been made, the bank would not have failed. The banking system he says is strong and resilient and well capitalized.
The Fed is committed to ensuring that all deposits are safe and it continues to monitor conditions in the banking system. Guys, I want to go through some of the tail of the tape here, which is maybe potentially interesting here. It says that Silicon Valley Bank was assigned a new team of supervisors in 2021. There were issued three warnings of ineffective oversight in May of 2022. The Fed's ranking of Silicon Valley Bank in the summer of 2022 was downgraded to fair. Supervisors expressed concern about interest rate profile, the interest rate risk profile in October 2022. And then maybe most interesting guys, in February 2023 the staff highlighted to the Federal Reserve Board of Governors the interest rate risk at Silicon Valley Bank in a broader presentation about that impact.
Now they do say, Barr will say it's the job of management, not supervisors to fix the problem of a bank, but it is interesting that the Board of Governors itself in February 2023 was indeed presented with the issue of interest rate risk at Silicon Valley Bank, among other banks in the system. Morgan.
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