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GAO Report on SVB, NY Fed Report on SVB

  • Bank Regulation – GAO-23-106736 – Preliminary Review of Agency Actions Related to March 2023 Bank Failures – Report to the Committee on Financial Services, House of Representatives, April 2023. Released April 28, 2023: “Risky business strategies along with weak liquidity and risk management contributed to the recent failures of Silicon Valley Bank and Signature Bank. In both banks, rapid growth was an indicator of risk. In 2019–2021, the total assets of Silicon Valley Bank and Signature Bank grew by 198 percent and 134 percent respectively—far exceeding growth for a group of 19 peer banks (33 percent growth in median total assets). To support their rapid growth, the two banks relied on uninsured deposits, which can be an unstable source of funding because customers with uninsured deposits may be more likely to withdraw their funds during times of stress. Additionally, Silicon Valley Bank was affected by rising interest rates and Signature Bank had exposure to the digital assets industry. The banks failed to adequately manage the risks from their deposits..”
  • New York State Department of Financial Services Internal Review of the Supervision and Closure of Signature Bank, April 28, 2023: “Moreover, Signature claimed $5 billion of its projected $6 billion deposit inflow would come from a DFS-regulated virtual currency company. As a result of DFS’s oversight of that entity, DFS had information that contradicted the Bank’s representations. Specifically, that entity advised DFS that the amount being transferred from SVB to Signature was approximately half what Signature was representing and, because of delays caused by SVB being placed into receivership, the money would not be available until Tuesday at the earliest…”
  • Bloomberg: Signature Bank Was Seized After Leaders Caused ‘Crisis of Confidence’: Failure ‘had nothing to do with crypto,’ New York DFS says; Bank lost 20% of deposits on Friday, or about $17.8 billion

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