7:05 a.m. ET, April 28, 2023
Read what this former banking regulator said about SVB
A security guard at Silicon Valley Bank monitors a line of people outside the office on March 13, in Santa Clara, California.
(Justin Sullivan/Getty Images)
There are still many unanswered questions about Silicon Valley Bank’s implosion, including what, if anything, could have been done to prevent it.
Friday’s report will “identify a number of things that need to be looked at without really having final recommendations,” since the authors of the report were given a tight deadline, Randal Quarles, former vice chair of supervision at the Fed, told CNN in an exclusive interview.
Quarles said he thinks regulators like himself and supervisors could get some of the blame for SVB’s failure. But he said supervisors, in particular, should not get thrown under the bus.
“If you drop an apple into the garbage can and it flies up to the ceiling and breaks a light, you’re not going to criticize the person who dropped the apple for being careless and breaking the light — the apple was supposed to fall into the garbage can.”
It’s possible that the report will recommend changing the process for elevating issues supervisors identify up the chain of command.
That’s why Quarles said he didn’t hear about the red flags Fed officials identified when he was vice chair for supervision. More importantly, current Federal Reserve Vice Chair of Supervision Michael Barr, who took office in July 2022, told lawmakers he “first learned about the issues at Silicon Valley Bank with respect to interest rate risk in mid-February of 2023,” just weeks before the bank collapsed.
