Skip to content

Fed's Barr Learns of SVB Risks Before Bank Failure

Federal Reserve's Michael Barr discovered Silicon Valley Bank's interest rate risk just weeks before its collapse, despite previous concerns raised by supervisory staff.

Michael S. Barr, Vice President of the Federal Reserve of the U.S.
Michael S. Barr, Vice President of the Federal Reserve of the U.S.

Barr Informed of SVB's Interest Rate Risk in Mid-February

Michael Barr, the U.S. Federal Reserve's head of banking supervision, revealed on Tuesday that he was first made aware of the interest rate risk-related issues at Silicon Valley Bank (SVB) in mid-February, just weeks before its failure.

Fed Staff Presents SVB Risk Review to Central Bank's Board

Barr stated that Fed staff presented to the central bank's board in mid-February, indicating they were following up with SVB on risk related to rising interest rates. Staff highlighted the interest-rate risk at SVB and revealed they were in the middle of a further review.

Previous Concerns and Actions by Fed Supervisory Staff

Fed supervisory staff had raised serious concerns over SVB's interest-rate risk and liquidity management, demanding fixes from the bank in November 2021. In mid-2022, the bank's management was deemed deficient by Fed staff, resulting in a ban on growth through mergers or acquisitions.

SVB CFO Informed, but Barr was Unaware Until February 2023

Fed supervisors brought those issues to SVB's chief financial officer in October 2022 and raised additional concerns to SVB management in November. However, Barr said the issues weren't brought to his attention until last month's staff presentation.