After the catastrophic collapse of Silicon Valley Bank in March, which was the second-largest bank failure in U.S. history, House Republicans have launched a fresh inquiry into the Federal Reserve Bank of San Francisco to uncover many unanswered questions. Due to the irresponsibility of the Democrats, the US Government, taxpayers, and ordinary citizens are now grappling with the consequences of these errors.
San Francisco Fed Facing New Investigation Over Silicon Valley Bank Collapse https://t.co/MrzSnzYARo
— Townhall.com (@townhallcom) April 28, 2023
The investigation will be led by James Comer (R-KY) and Lisa McClain (R-MI) and will scrutinize the business practices of SVB, the San Francisco Fed's role, and other regulators regarding the bank's failure, as well as any other considerations that may have influenced SF Fed's enforcement decisions. They began the investigation by sending a letter to SF Fed President and CEO Mary Colleen Daly, urging her to provide specific answers.
According to GOP lawmakers, SF Fed filed six Matters Requiring Attention (MRA) or Matters Requiring Immediate Attention (MRIA) against SVB, but failed to address the ongoing issues, indicating regulators were aware of the problems related to SVB but chose not to take action. This is another instance where Federal Regulators failed in their duty to oversee financial institutions, once again putting American taxpayers at risk.
Furthermore, the Republicans' letter highlights some significant findings: "SVB's growth did not align with appropriately diversified assets and liabilities, and regulators filing MRAs and MRIAs may have been aware that almost 96 percent of deposits held at SVB were uninsured at the end of 2022, making the bank vulnerable to a run." These reports raise concerns about SF Fed's lack of proper supervision of problematic banks.
House Republicans have stressed the need for regulatory reform in response to SF Fed's lenient approach, calling for a congressional investigation into whether business relationships or other factors influenced the enforcement of financial institutions' regulations. To facilitate this investigation, the GOP lawmakers have requested confidential information and documents from the San Francisco Fed.
In their pursuit of transparency and clarity, House GOP lawmakers have requested examination and audit reports, communications and correspondence between SF Fed board members and other regulators, as well as any warnings issued against SVB, minutes of SF Fed Board meetings, and data related to SVB to fully comprehend the reasons for the bank's collapse. Additionally, the DOJ under the Biden Administration is investigating the bank's failure, raising concerns about their motives.
Given the current state of affairs and the Biden Administration's inconsistent policies, House Republicans must use their legislative oversight powers to uncover the truth behind the collapse of SVB, particularly considering the progressive inclinations of the leaders involved, who are known for making substantial political contributions. The San Francisco Fed has a responsibility to provide the American public with answers, and it is critical to begin developing legislation aimed at improving the system to prevent future bank failures. The Federal Reserve, as an institution, has demonstrated its inability to handle cases involving financial institutions like the Silicon Valley Bank, and it must also undergo reforms.