SVB Execs Cause Bank's Failure: Fed

The nation’s financial regulator is asserting that Silicon Valley Bank’s own management was to blame for the bank’s failure and says the Federal Reserve will review whether a 2018 law that weakened stricter bank rules also contributed to its collapse, Christopher Rugaber reported for the Associated Press (AP).

Photo Insert: Barr attributed the collapse to the bank’s “concentrated business model,” in which its customers were overwhelmingly venture capital and high-tech firms in Silicon Valley.

“SVB’s failure is a textbook case of mismanagement,” Michael Barr, the Fed’s vice chairman for supervision, said in written testimony that will be delivered at a hearing of the Senate Banking Committee, Paul Wiseman also reported for AP.

Barr pointed to the bank’s “concentrated business model,” in which its customers were overwhelmingly venture capital and high-tech firms in Silicon Valley.

He also contends that the bank failed to manage the risk of its bond holdings, which lost value as the Fed raised interest rates. Silicon Valley was seized by the Federal Deposit Insurance Corp. (FDIC) on March 10 in the second-largest bank failure in US history.

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