Silicon Valley Bank's collapse is prompting scrutiny of the bank's poor risk management and regulators' failure to get the bank to change course before its implosion.
Former Federal Reserve Vice Chair Randal Quarles and Cornerstone Research Senior Adviser William Silber give their take on how the government should be responding to bank failures on Kudlow.has prompted scrutiny among federal regulators and lawmakers in Congress about what went wrong and raised questions regarding what legislative or regulatory reforms may be considered to avoid a future recurrence.
Barr said those were largely from venture capital firms and technology companies that created a deposit base that was "highly concentrated and could be volatile" because those firms tend to lack operating revenue and instead keep large balances above the $250,000 Federal Deposit Insurance Corporation threshold in banks to meet payroll and operating expenses.
SVB had to sell some of those securities at a loss of $1.8 billion March 8 to boost its liquidity and announced a plan to raise capital. SVB indicated it expected even bigger outflows the following day and lacked the cash and collateral to meet those rapid outflows, and it failed March 10. In May 2022, supervisors issued three findings related to ineffective board oversight, risk management flaws and ineffective internal audits.
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