The Federal Reserve Board on Monday said Vice Chair for Supervision Michael S. Barr will be leading a review of the supervision and regulation of Silicon Valley Bank, which collapsed last week after investors withdrew billions in only a matter of hours.
“The events surrounding Silicon Valley Bank demand a thorough, transparent, and swift review by the Federal Reserve,” Chair Jerome Powell said in a statement.
President Biden nominated Barr, a former Obama and Clinton administration official, in April 2022, after the failed nomination of Sarah Bloom Raskin.
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“We need to have humility, and conduct a careful and thorough review of how we supervised and regulated this firm, and what we should learn from this experience,” Barr said in a statement.
Barr’s review will be publicly released by May 1.
Depositors withdrew savings and investors broadly sold off bank shares Monday as the federal government raced to reassure Americans that the banking system was secure after two bank failures fed fears that more financial institutions could fall.
President Joe Biden insisted that the system was safe after the second- and third-largest bank failures in the nation’s history happened in the span of 48 hours. In response to the crisis, regulators guaranteed all deposits at the two banks and created a program that effectively thew a lifeline to other banks to shield them from a run on deposits.
“Your deposits will be there when you need them,” Biden told the public, seeking to project calm. He also said the banking executives responsible for the failures would be held accountable.
Regulators closed the Silicon Valley Bank on Friday after depositors rushed to withdraw their funds all at once. The only larger failure in U.S. banking history was the 2008 collapse of Washington Mutual. New York-based Signature Bank also collapsed in the third-largest failure in the U.S.
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In both cases, the government agreed to cover deposits, even those that exceeded the federally insured limit of $250,000.
The Associated Press contributed to this report.