{"id":20393,"date":"2023-04-29T18:57:25","date_gmt":"2023-04-29T18:57:25","guid":{"rendered":"https:\/\/crowdfundjunction.com\/blog\/reports-by-fed-and-fdic-reveal-vulnerabilities-behind-2-major-us-bank-failures-bitcoin-news\/"},"modified":"2023-04-29T18:57:25","modified_gmt":"2023-04-29T18:57:25","slug":"reports-by-fed-and-fdic-reveal-vulnerabilities-behind-2-major-us-bank-failures-bitcoin-news","status":"publish","type":"post","link":"https:\/\/crowdfundjunction.com\/blog\/reports-by-fed-and-fdic-reveal-vulnerabilities-behind-2-major-us-bank-failures-bitcoin-news\/","title":{"rendered":"Reports by Fed and FDIC Reveal Vulnerabilities Behind 2 Major US Bank Failures \u2013 Bitcoin News"},"content":{"rendered":"

(Originally posted on : Bitcoin News )<\/b>
\n<\/p>\n

\n
\n<\/header>\n
\n\n<\/div>\n

On Friday, Michael Barr, the vice chair for supervision at the U.S. Federal Reserve, published a report on the vulnerabilities that led to the ultimate failure of Silicon Valley Bank (SVB). In addition, Marshall Gentry, the chief risk officer of the Federal Deposit Insurance Corporation (FDIC), released a similar report on Signature Bank\u2019s collapse and its overreliance on uninsured deposits.<\/strong><\/p>\n

Fed Is Confident Supervisory Recommendations \u2018Will Lead to a Stronger and More Resilient Banking System\u2019<\/h2>\n

The Federal Reserve and the FDIC published reports on Friday concerning the fall of the second and third-largest U.S. bank failures in history. The first report<\/a>, published by the Fed\u2019s vice chair for supervision Michael Barr, claims the central bank\u2019s supervisors failed to recognize the extent of vulnerabilities at Silicon Valley Bank (SVB) as it grew in size and complexity. Barr wrote that SVB had 31 open supervisory findings while other banks had much fewer in comparison.<\/p>\n

\"Reports<\/p>\n

The report offers a comprehensive perspective, noting that the Federal Reserve\u2019s supervisory approach failed to fully contemplate the ramifications of rising interest rates. Then a slowing activity in the technology sector, ultimately paved the way for the demise of SVB. \u201cThe supervision of SVB did not work with sufficient force and urgency, and contagion from the firm\u2019s failure posed systemic consequences not contemplated by the Federal Reserve\u2019s tailoring framework,\u201d Barr said. Barr\u2019s report mentions crypto three times and one instance is located on a bar chart describing risks.<\/p>\n

\u201cAs I have previously announced, the Federal Reserve has begun to build a dedicated novel activity supervisory group to focus on the risks of novel activities (such as fintech or crypto activities) as a complement to existing supervisory teams,\u201d Barr stated.<\/p>\n

FDIC Report Discusses Crypto Risks and SBNY\u2019s \u2018Flurry of Negative Press\u2019<\/h2>\n

The FDIC published its report<\/a> on Signature Bank\u2019s (SBNY) collapse and the report authored by Marshall Gentry talks a lot more about crypto assets and the FTX failure. Throughout the report, Gentry discusses how liquidity risk management witnessed withdrawals of uninsured deposits rise to critical levels. On page 13, the FDIC report goes into great detail about the crypto industry turmoil that bolstered SBNY\u2019s failure. \u201dThe strategy exposed SBNY to greater susceptibility to liquidity, reputation, and regulatory risk due to the uncertainty and volatility of the digital asset space,\u201d Gentry explained.<\/p>\n

\"Reports<\/p>\n

The report describes how two cryptocurrencies collapsed in May 2022 (terrausd<\/a> and luna), leading to additional turbulence in the industry and further discusses the collapse of FTX. It noted that SBNY\u2019s shares were correlated with the crypto industry. \u201cDue to its reputation as a banker to many in the crypto industry, SBNY\u2019s stock price closely tracked these tumultuous events in the crypto industry space and dropped significantly during 2022,\u201d the report notes. Both reports were approved by the Fed\u2019s chair Jerome Powell and the FDIC\u2019s chair Martin Gruenberg.<\/p>\n

\n
\nTags in this story
\n<\/h6>\n
bank failures<\/a>, crypto industry<\/a>, FDIC<\/a>, Federal Reserve<\/a>, liquidity risk management<\/a>, rising interest rates<\/a>, Signature Bank<\/a>, Silicon Valley Bank<\/a>, supervisory approach<\/a>, technology sector<\/a>, Uninsured Deposits<\/a>, US banking regulators<\/a><\/div>\n<\/div>\n

What\u2019s your take on the reports published by the Federal Reserve and the FDIC on the fall of Silicon Valley Bank and Signature Bank? Let us know your thoughts in the comments section below.<\/strong><\/em><\/p>\n

\n
\n\n<\/div>\n
\n
\nJamie Redman <\/h6>\n

\nJamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 7,000 articles for Bitcoin.com News about the disruptive protocols emerging today.

\n
\n
\n<\/a>
\n<\/span>\n<\/p>\n<\/div>\n<\/div>\n

Image Credits<\/b>: Shutterstock, Pixabay, Wiki Commons<\/em><\/p>\n

\n

Disclaimer<\/strong>: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com<\/a> does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.<\/p>\n<\/div>\n

\n