The Senate Banking Committee summoned key officials from the Federal Reserve, FDIC, and US Treasury Department. And the tone was quite angry.
Senators were flummoxed that their thousands of pages of banking legislation had once again failed to provide adequate protection to the US financial system. And they were looking for someone to blame.
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The Fed’s Vice-Chairman for Banking Supervision admitted that his agency’s supervisors had rated SVB as a poorly managed bank. And the Fed was further aware of several material weaknesses in the SVB’s risk compliance.
They acknowledged that they had advanced knowledge of the banks’ problems.
They acknowledged they should have done something about it. They acknowledged they had the tools and authority to do something about it.
Yet they did absolutely nothing… and somehow ended up being praised as gusty and courageous.
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The biggest falsehood of yesterday’s hearing, however, was the continued insistence by all that “our banking system is strong and resilient”. Coincidentally they presented zero evidence to support that assertion.
In fact most evidence would support the opposite conclusion– that there are still a number of major problems in the banking system.
Our banking system is sound, yes sir, that sound is empty.