The Fed was the primary federal supervisor of the bank based in Santa Clara, California, that failed last week. The bank was also overseen by the California Department of Financial Protection and Innovation.
about how high to raise its benchmark interest rate in the fight against chronically high inflation.
With the collapse of the two large banks fueling anxiety about other regional banks, the Fed may focus more on boosting confidence in the financial system than on its long-term drive to tame inflation., released Tuesday, shows that price increases remain far higher than the Fed prefers, putting Chair Jerome Powell in a tougher spot. Core prices, which exclude volatile food and energy costs and are seen as a better gauge of longer-run inflation, jumped 0.
Most banks would have sought to make other investments to offset that risk. The Fed could have also forced the bank to raise additional capital. Such an unusually high proportion made Silicon Valley Bank highly susceptible to the risk that depositors would quickly withdraw their money at the first sign of trouble — a classic bank run — which is exactly what happened.
Many critics also point to a 2018 law as softening bank regulations in ways that contributed to Silicon Valley's failure. Pushed by the Trump administration with bipartisan support in Congress, the law exempted banks with $100 billion to $250 billion in assets — Silicon Valley's size — from requirements that included regular examinations of how they would fare in tough economic times, known as “stress tests.
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