The Federal Reserve expressed concerns about Silicon Valley Bank's risk management practices at least four years before its collapse earlier this month, according to reports.
The Fed issued a warning to SVB in January 2019 about its system to control risk, the Wall Street Journal reported Sunday. The central bank went on to issue numerous additional warnings to SVB in 2020 and 2021, suggesting the bank's problems were on the Fed's radar for long before going under.
Banking regulators shut down SVB earlier this month, two days after the nation's 16th-largest federally insured bank announced that it needed to raise more than $2.2 billion to remain solvent, which sent its stock price plunging over 60% in 48 hours. Last Sunday, they also announced the closure of Signature Bank while revealing plans to make customers of both financial institutions whole. The SVB failure is the second-largest in U.S. banking history while Signature Bank is the third.
The White House has called on Congress to strengthen regulations to prevent an industry-wide collapse of smaller banks, though Democrats are split on the issue while Republicans are united against it.
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