Bank / Credit Union

California bank regulator says it acted too slowly with SVB

Image via Adobe Stock

May 9, 2023

California's Department of Financial Protection said it failed to take proper oversight regarding Silicon Valley Bank, which contributed to the bank's demise in March. The agency said it acted too slowly to address the bank's insufficient risk management, according to a Reuters report.

The agency said SVB "was slow to remediate regulator-identified deficiencies, and regulators did not take adequate steps to ensure SVB resolved problems as fast as possible."

SVB's assets quadrupled in four years to more than $200 billion by 2021, with a high number of uninsured deposits. The agency said normally these deposits did not cause risk as they were usually held by corporate clients who did not change banks frequently.

However, in the future, the agency said it would apply more oversight to banks with $50 billion or more in assets, especially those with large amounts of uninsured deposits.

The department played a supporting role with regulating SVB, while the Federal Reserve Bank of San Francisco played the primary role, according to the report.

The Federal Reserve and Federal Deposit Insurance Corp. put out a similar report in April in which they also said they failed to act quickly. In the report, they said they would deliver more supervision and stricter rules for banks, such as increased capital and liquidity requirements, according to a separate Reuters report.