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| US Regulators Accept Responsibility for SVB's Collapse Due to Excessive Interest-rate Risk |
Regulators from the US Federal Reserve have acknowledged their share of responsibility for the recent collapse of Silicon Valley Bank, which was due to excessive interest-rate risk. During a Congressional hearing, Federal Reserve Vice Chair for Supervision Michael Barr stated that regulators and the regulatory system had failed alongside bank management. The Federal Deposit Insurance Corporation Chair Martin Gruenberg also accepted responsibility and blamed the management of the Californian lender for its failure.
The collapse of Silicon Valley Bank caused a bank run and a sell-off of banking stocks by investors, leading to the fall of another regional lender, Signature Bank, and the merger under pressure of Swiss banking giant Credit Suisse. The second day of Congressional hearings came after Senators had accused regulators of not doing enough to prevent the bank's collapse, despite knowing it was exposed to the risk of rising interest rates.
The collapse of Silicon Valley Bank has highlighted the importance of effective regulatory oversight in the banking sector. It has also raised concerns about the impact of bank failures on the broader financial system and the need for regulators to take swift action to prevent contagion.
