California banking regulators said Monday they recognized the growing risks at Silicon Valley banks too late and did not act forcefully enough to force the banks to fix the problem.
A California Department of Financial Protection and Innovation report echoes similar findings on the Federal Reserve’s oversight of Silicon Valley banks. The Federal Reserve (Fed) has been very critical of its role in the bank’s failure, and regulators have been too slow or reluctant to pressure the bank’s management to address the problem. said there wasn’t.
Silicon Valley Bank collapsed and collapsed on March 10 after depositors rushed tens of billions of dollars out of the bank in the bank run of the 21st century. The aftermath of bank failures rocked the financial system, leading to the failures of Signature Bank and First Republic Bank, and leaving several other banks in severe financial distress.
California was the epicenter of the banking turmoil. San Francisco-based First Republic was shut down by regulators and sold to JPMorgan Chase last week. Los Angeles-based PacWest Bank was battered by financial markets after First Republic collapsed last week.
In its report, the DFPI said its staff realized too late how First Republic and Silicon Valley Bank had expanded so quickly, garnering billions of dollars in deposits during the COVID-19 pandemic. said. Employees also said they were unaware of the risks associated with banks becoming too big too quickly.
The agency also recognizes the potential risks represented by the large amount of uninsured deposits being made at Silicon Valley banks and the implications if those wealthy depositors suddenly become concerned about the financial condition of the banks. said no.
The DFPI plans to hire more people to oversee banks with more than $50 billion in assets and those that may have deposits concentrated in certain sectors, as Silicon Valley Bank has done in the technology industry. said standing.
