At the time of its failure, Silicon Valley Bank had 31 unaddressed safety-and-soundness supervisory warnings from regulators, which was triple the average number of peer banks at that time according to a 118-page report published this week by the Federal Reserve.
The Fed announced the results from this special review of supervision and regulation of the bank, which can be viewed here. Findings include the following:
The report discusses in detail the management of the bank and the supervisory and regulatory issues surrounding the failure of the bank. It goes through the recent supervisory history of Silicon Valley Bank and includes more than two dozen documents containing the bank’s confidential supervisory information, such as supervisory letters, examination results, and supervisory warnings.
The report and documents detail the bank’s rapid growth, as well as the challenges Federal Reserve supervisors faced in identifying the bank’s vulnerabilities and forcing the bank to fix them.
U.S. GAO Report on Failed Banks
In addition, the U.S. Government Accountability Office (GAO) also released its own report on the failures of Silicon Valley Bank and Signature Bank. It indicates that risky business strategies, along with weak liquidity and risk management, contributed to these recent failures. In both banks, rapid growth was an indicator of risk.
Furthermore, the report states that in the five years prior to 2023, regulators identified concerns with Silicon Valley Bank and Signature Bank. However, both banks were slow to mitigate the problems the regulators identified, and regulators did not escalate supervisory actions in time to prevent the failures.
The League will also provide a more detailed review of the results from this report as well. The news release for the GAO report can be found here.
1Q 2023 Banking Outlook Survey
According to a newly released survey, about 53 percent of U.S. financial institutions expect marketplace deposit growth to increase between now and late 2023 — and 47 percent of respondents say deposit-account interest rates paid to credit union members and bank customers will continue jumping higher in tandem.
That was the response from 44 U.S. credit unions, 147 banks, and 16 other financial institutions surveyed in S&P Global Market Intelligence’s latest First-Quarter 2023 U.S. Banking Outlook Survey, which asks respondents questions about deposit growth, loan growth, future interest rates, and more.
Other survey respondent findings include the following:
U.S. Bank Marketplace: More Findings
Looking ahead, S&P Global Market Intelligence’s U.S. Bank Market Report for 2023 is forecasting the following:
Additional Analysis, Reports, & Presentation Slides
You can also review the latest release this past week: