Federal Reserve will re-examine its own oversight of Silicon Valley Bank
Chairman Jerome Powell was one leader who commented on the Fed's failures.
The Federal Reserve Board announced that it will lead a review of its own supervision of Silicon Valley Bank (SVB), according to a statement on March 13.
Fed will look into its own regulation
Vice Chair for Supervision Michael S. Barr said that SVB’s failure necessitates “humility and … a careful and thorough review” as the Federal Reserve examines its own regulation and supervision of the bank. Barr himself will lead the review, which is due on May 1.
Federal Reserve chairman Jerome H. Powell added that SVB’s collapse requires a “thorough, transparent, and swift review” from the agency.
Elsewhere, the industry watchdog Better Markets has suggested that the Federal Reserve is incapable of reviewing its own activities. Instead, the group says that an independent investigator should be appointed to carry out an examination.
The course of action that is ultimately taken should not affect investors directly, as the Federal Reserve is not primarily responsible for handling SVB’s failure at this point. Instead, that duty falls with the Federal Deposit Insurance Corporation (FDIC), which initially closed the bank on March 10 and said that it would act as receiver.
The FDIC said on March 13 that it will move all user assets to a bridge bank so that users can access those funds. Reports from the Wall Street Journal also suggest that the FDIC will attempt to re-auction Silicon Valley Bank to further advance a recovery.
SVB did not primarily serve crypto industry
Though Silicon Valley Bank did not primarily serve crypto companies, at least two blockchain firms held funds with the bank. Stablecoin issuer Circle said it had $3.3 billion of its reserves with SVB. Though that news led USD Coin (USDC) to lose its peg with the dollar this weekend, Circle accessed its funds and the value of USDC is once again $1.00
Meanwhile, the bankrupt lending firm BlockFi had $227 million with Silicon Valley Bank, according to statements from U.S. officials in a bankruptcy filing.
The collapse of SVB was preceded by the failure of Silivergate Bank on March 8 and followed by the seizure of Signature Bank on March 12.