“The California Department of Financial Protection and Innovation (DFPI) today released its Review of DFPI’s Oversight and Regulation of Silicon Valley Bank (SVB). The report summarizes DFPI’s supervision of SVB and reviews the circumstances that led to the failure of the bank. Findings include:
- SVB was slow to remediate regulator-identified deficiencies; and regulators did not take adequate steps to ensure the bank resolved problems as fast as possible;
- Recent rising interest rates led to SVB’s startup deposits decreasing and its investments losing value, contributing to liquidity challenges;
- SVB’s unusually rapid growth was not sufficiently accounted for in risk assessments.
- SVB’s high level of uninsured deposits contributed to the bank run; and
- Digital banking technology and social media accelerated the volume and speed of the run on SVB and contributed to its ultimate collapse.
The report also outlines next steps for DFPI to improve its supervision of state-chartered banks for the future…”