Big banks are reportedly largely overseen by Fed officials in Washington rather than in regional offices.
While regional Fed offices supervise banks with assets under $100 billion, the Federal Reserve Board of Governors in Washington watches the banks with assets higher than that threshold, CNBC reported Friday (March 31).
This finding comes amid congressional hearings that saw criticism directed at San Francisco Fed President Mary Daly, whose district included the now-failed Silicon Valley Bank, according to the report.
Because that bank had assets over $100 billion, the key decisions around its supervision are likely to have been made in Washington rather than by the regional office of the Fed, the report said.
While district offices monitor all banks in their area, the key decisions about actions to be taken around the big banks are made by the national office, per the report.
The report cited a statement by Michael Barr, the Fed vice chair for supervision, during this week’s congressional hearings, in which he said that local supervisors report to the national board.
“The examiners at the San Francisco Federal Reserve Bank called those issues out to the board, called them out to the bank … and those actions were not acted upon in a timely way,” Barr said when asked about problems that had been identified at Silicon Valley Bank before its failure.
During one of this week’s hearings in the House, lawmakers asked why federal regulators didn’t use their powers during the lead up to the recent bank failures.
“We know the bank was mismanaged—that much is clear. Now, we need insight into the decision-making process of the financial regulators related to the second and third largest U.S. bank failures,” House Financial Service Committee Chairman Patrick McHenry (R-N.C.) said at the beginning of the Wednesday (March 29) hearing.
It was reported that same day that the White House plans to call for tougher regulation of banks, with recommendations for congressional action possibly being announced within days.
President Joe Biden has already called for laws that would impose tougher penalties on executives responsible for bank failures.