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The Federal Reserve Cannot Investigate Itself for its Failure to Properly Supervise Silicon Valley Bank; An Independent IG Needs to Be Appointed ASAP [1]
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Date: 2023-03-13 21:27:17+00:00
WASHINGTON, D.C.— Dennis M. Kelleher, Co-founder, President and CEO, issued the following statement in connection with the Federal Reserve’s announcement of investigating itself for its failures in connection with the collapse of Silicon Valley Bank (SVB).
“Federal Reserve supervision utterly failed in connection with the collapse of Silicon Valley Bank (SVB), as detailed here, and potentially at other banks. That requires a thorough and independent investigation to determine how that could have happened, particularly given that just a few short years ago banking regulators failed to identify and stop Wells Fargo’s years-long, egregious lawbreaking abusing customers.
“The Fed simply cannot credibly do a thorough and independent investigation of itself. Moreover, imposing an artificial and quick deadline of May 1st for the public release of the investigation’s report raises very troubling questions as to the genuine commitment to a thorough investigation. Additionally, there is no one at the Fed who is sufficiently independent to do this much-needed investigation, including the Fed’s Inspector General (IG), who is an employee who serves at the pleasure of the Chairman. That was proved recently by his very narrow, incomplete and misleading so-called investigation of the Chairman’s and former Vice Chairman’s personal stock sales while the Fed was undertaking extraordinary measures during the pandemic.
“The Fed must immediately ask the Department of Justice IG Michael Horowitz who is the Chair of the Council of the Inspector Generals on Integrity and Efficiency (CIGIE) to appoint either himself or another independent IG to conduct a thorough investigation of the failures of Federal Reserve supervision. This is particularly important here given the gravity of the consequences of the Fed’s failure here and the fact that it is not an isolated case of banking supervisors failure.”
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