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Fed Blocked Mention of Regulatory Flaws in Silicon Valley Bank Rescue [1]
['Jim Tankersley', 'Jeanna Smialek', 'Emily Flitter']
Date: 2023-03-16
WASHINGTON — As U.S. regulators prepared to announce an extraordinary government rescue of depositors at Silicon Valley Bank and Signature Bank on Sunday, officials from the Biden administration pushed to formally spotlight shortcomings in financial regulation that they blamed for the banks’ rapid descent to insolvency, according to several people involved in or close to the discussions.
But Jerome H. Powell, the chair of the Federal Reserve, blocked efforts to include a phrase mentioning regulatory failures in the joint statement released early Sunday evening by the Fed, the Treasury Department and the Federal Deposit Insurance Corporation.
Government officials raced through the weekend to decide how to protect the financial system against the failure of Silicon Valley Bank, and the back and forth underlined a tension in the discussions. Some administration officials wanted to include that lapses in bank regulation and supervision had contributed to the problems that helped fell the bank.
Mr. Powell pushed to take the line on regulation out of the statement because he wanted to focus on the actions being taken to shore up the financial system, according to a person familiar with that matter. Those steps included ensuring that no depositors at Silicon Valley Bank would lose their money and setting up a new program from the Fed to provide loans that could help the banking system at a challenging moment.
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[1] Url:
https://www.nytimes.com/2023/03/16/business/fed-regulation-svb.html
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