Apr 28, 2023 - Economy

Regulators set to release post-mortem reports on bank failures

Courtenay Brown

FDIC chair Martin Greunberg alongside Fed's Michael Barr testifying in Washington — FDIC chairman Martin Gruenberg (right) and Michael Barr, the Fed's vice chair for supervision, testifying before Congress last month. Photo: Tom Williams/CQ-Roll Call, Inc via Getty Images

A week that saw renewed fears about the banking system will come to a fitting end Friday with the release of two reports examining what first sparked last month's crisis.

What's happening: The first report is from the Fed — an internal review of regulatory missteps that led to the failure of Silicon Valley Bank. It's been dubbed the "Barr report" after the Fed's regulatory cop Michael Barr, who led the investigation.

The second will come from the FDIC on why Signature Bank was seized by the government. It will also evaluate whether the agency's supervision of the firm was adequate.

Why it matters: The reports are expected to be the most comprehensive telling yet of the events that led to extraordinary action to backstop the banking system — and what regulatory actions could have prevented the collapses.

Yes, but: Neither review is totally independent; the agencies are essentially investigating themselves.

State of play: For SVB, one big question is why Fed supervisors didn't act more aggressively after the bank ignored its repeated warnings about its problems. What could (and should) supervisors have done differently?

Another is the extent to which firmer regulations, like those rolled back in 2019, could have headed off the bank's failure.

Meanwhile, it's the FDIC report that may be of the most intrigue. That's because so little is known about why Signature Bank failed.

That's the huge question: Why (and when) exactly did government officials lose confidence in the bank?

What's next: A separate report from the FDIC on deposit insurance is due on Monday.

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Regulators set to release post-mortem reports on bank failures

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