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Could the Fed Have Avoided SVB's Collapse?

Could the Fed Have Avoided SVB's Collapse?

by Starling Insights

Starling Insights Editorial Board

May 09, 2023


Senior officials at the Federal Reserve reportedly discouraged examiners from investigating potential issues at Silicon Valley Bank and other mid-size and small banks, media sources suggest, reflecting a shift in supervisory policy. It is claimed that the Fed prioritized advancing the financial health of banks over their regulatory oversight, potentially putting consumers at risk.

"Not only were the rules weakened, but there was a change in supervision to much lighter supervision, with messaging that fewer issues should be escalated, [and] that examiners should not be as intrusive for this size-class of banks," said Lael Brainard, a former Board member who left the central bank to lead President Joe Biden's National Economic Council.

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