FED Response to Bank Failures

     After the turmoil in the banking industry earlier in the year, the FED has released a 114 page report, in it accepting some of the blame for the failure, stating that FED supervisors failed to grasp the extent of the problems at Silicon Valley Bank in a timely manner, and when problems were finally noticed, the FED failed to ensure the problems were fixed. The FED also links to changes in 2019 that exempted most banks from strict scrutiny as partly responsible. In addition, the FED has now called on for more regulations, as Michael Barr, the Fed's vice chair for supervision, who led the review, states "Following Silicon Valley Bank's failure, we must strengthen the Federal Reserve's supervision and regulation, based on what we have learned," and this sentiment was echoed by FED chairman, Jerome Powell, who responded to the report by stating, "I welcome this thorough and self-critical report on Federal Reserve supervision from Vice Chair Barr... I agree with and support his recommendations to address our rules and supervisory practices, and I am confident they will lead to a stronger and more resilient banking system." Vice Chair Barr believes there were unique circumstances surrounding SVB that caused it to fail, but the article notes that the speed of the bank run, with customers attempting to withdraw almost $140 billion in two days, is something the FED should take into account for the future, as well as noting the large ripple effects caused by SVBs trouble, with confidence in the entire banking industry being affected. 

source: https://www.npr.org/2023/04/28/1172715215/silicon-valley-bank-postmortem-federal-reserve-fdic-signature-bank