Republicans on the Senate Banking Committee are probing the Federal Reserve for more information about its supervision of Silicon Valley Bank in the months and years leading up to its failure.
Sen. Tim Scott, R-S.C., the ranking member on the committee,
In the letter, Scott argues that clear signs of risk within the Santa Clara, California-based bank went unchecked, including its over-reliance on uninsured deposits, its failure to manage interest rate risk and its concentration on a single industry — venture capital-backed tech and biotech startups. In light of this, he said, it was apparent that Fed supervisors "neglected to intervene in a meaningful, appropriate way to rectify the bank's deficiencies."
"We are deeply concerned by the recent demise of SVB — the second largest bank failure in U.S. history — and the actions undertaken by both SVB management and the Federal Reserve leading up to SVB's collapse," Scott wrote. "From publicly available information, it is now well understood that SVB suffered from rampant mismanagement, ultimately resulting in its catastrophic failure."
All 11 Republicans on the committee co-signed the letter.
A spokesperson for the Board of Governors confirmed receipt of the letter and said the Fed planned to respond.
While the Republicans on the committee, by virtue of being the minority party, cannot call hearings about the matter or issue subpoenas, the missive further outlines the party's stance that the matter was a singular failure of management by the bank and
Earlier this week, Scott and Rep. Patrick McHenry, R-N.C., chair of the House Financial Services Committee,
The Senate Banking Committee's latest letter outlined a wide-ranging list of requests, including access to all calendar entries from the Fed Board of Governors, the president and first vice president of the San Francisco Fed and all examiners tasked with monitoring Silicon Valley Bank.
Because the Santa Clara, California-based bank had more than $100 billion, it fell within the scope of the Fed's Large and Foreign Banking Organization program, in which supervision is shared by the Board in Washington, D.C., and the institution's regional reserve bank.
Senate Banking Republicans also asked for the bank's capital adequacy, assets, management capabilities, earnings, liquidity and sensitivity, or CAMELS, ratings dating back to January 2019, as well as all supervisor-issued citations — known as Matters Requiring Attention or Matters Requiring Immediate Attention — and any liquidity or capital review performed during that same time period. That information is typically treated as confidential and, in some cases, is illegal for banks or regulators to share publicly.
The group is also seeking information on when and how the Fed flagged concerns over various risks, including the bank's rapid growth between 2020 and 2022, its concentration, its depositor base and its lack of a chief risk officer for eight months last year.
"The American people deserve transparency and accountability from their government officials, and they are entitled to understand precisely what Federal Reserve officials knew about the apparent risks associated with SVB, when they knew it, and why they failed to act to prevent the bank failure from occurring," Scott wrote.
Criticism of the Fed's supervision of Silicon Valley Bank has been a bipartisan affair. Sen. Elizabeth Warren, D-Mass., sent her own letter probing the San Francisco Fed last week. She has also joined with Sen. Rick Scott, R-Fla., in introducing legislation that would establish a presidentially-appointed and Senate-confirmed inspector general to the Board of Governors of the Federal Reserve System.
Requests for information from the Fed and its reserve banks made by Senate Banking Committee members have gone unanswered in the past. This was a particular sticking point for former ranking member then-Sen. Pat Toomey, R-Pa. Before leaving office last year, he and Warren
The letter sets a deadline for the Fed to respond by April 6.
