The secretive world of Federal Reserve bank supervision has been laid bare by the collapse of Silicon Valley Bank and critics say it needs an overhaul to make it more nimble, transparent and decisive.
In hearings this week, Fed Vice Chair for Supervision Michael Barr told lawmakers that supervisors had repeatedly identified risks to the failed bank, beginning in 2021, and even took steps to restrict its growth in 2022 because they went unaddressed.
Despite all that, SVB hit a wall earlier this month, collapsing in the space of less than 48 hours and unleashing fears of contagion. That has led to accusations by lawmakers that the Fed had not escalated the problem fast enough and questioning whether the whole process needs to be more transparent.