New York (EFE).- The supervision work carried out by the Federal Reserve (Fed) with Silicon Valley Bank (SVB) has been in the eye of the hurricane after the collapse of the entity, with Democratic Senator Elizabeth Warren calling this Sunday for an independent investigation into the possible rulings.
In a letter, the influential Warren called on the inspectors general of the Treasury, the Fed and the US guarantee fund to present lawmakers with a preliminary report on recent banking and regulatory problems within 30 days.
The message at least partially blames the central bank for the falls of the SVB and Signature Bank, which in recent days have raised doubts about the health of other entities and created fear of a new financial crisis.
“Bank executives, who took unnecessary risks or failed to prepare for fully foreseeable threats, must be held accountable for these failures. But the mismanagement was allowed by a series of failures by lawmakers and regulators,” said Warren, who is seeking tougher rules on the financial sector.
His message comes as various reports suggest that the Fed was well aware of the SVB’s problems and was unable to take action to prevent them from collapsing.
signs of collapse
According to sources quoted this Sunday by The New York Times, the Federal Reserve already detected significant weaknesses in 2021 and issued several warnings to the bank, even putting it under special surveillance last year.
All of this has led some to question whether the US central bank could have done more to force the SVB to change course and thus prevent its fall.
Warren, in a television interview today, pointed directly to Fed chief Jerome Powell as ultimately responsible for the supervisory failure and accused him of being more concerned with lightening banking regulations than ensuring adequate oversight.
The legislator, from the left wing of the Democratic Party and one of the most critical voices against Wall Street in the US Senate, has denounced that the problems derive in addition to a law that was approved in 2018, during the Administration of Republican Donald Trump, and which exempted banks from some of the rules that had been put in place after the 2008 financial crisis.
Last week, Warren already presented a proposal to reverse that measure, also highly criticized by other figures on the left such as Senator Bernie Sanders.
Sanders joins the criticism
This weekend, Sanders announced for his part that he will propose a law to end the “conflicts of interest” that are generated by allowing bank executives to serve on Fed boards.
“One of the most absurd aspects of the fall of Silicon Valley Bank is that its CEO is a director in the body in charge of regulating it: the San Francisco Fed,” he said via Twitter.
Last Monday the US Federal Reserve already announced that it is investigating its management and supervision of the SVB and that it will publish a report with its conclusions on May 1st.