As noted in an earlier post, efforts to reduce the role of supervisory guidance included limiting the use of numerical bright lines.  While regulators need to develop and apply these bright lines with some care, their absence can undermine effective supervision. The “guidance on guidance” specifically cautions against the use of quantitative thresholds or bright…

A fundamental problem with the bill is that it tends to assume away political dysfunction and labor market realities. Our hyper-partisan political environment isn’t very good at filling independent, non-partisan positions.

Bloomberg Tax reports that Silicon Valley Bank omitted economic value of equity (EVE) metrics from its December 2022 10-K after including EVE for the previous ten years.  Perhaps more notable, however, is that few large banks report EVE externally.  Even fewer provide sufficient detail on key assumptions to allow for a meaningful assessment of interest…

Shortly after VJ Day, my dad received the letter below from his buddy Harry Truax.  My dad kept the letter for the rest of his life, and I’ve kept it to this day.  The letter reads as follows (apologies for any transcription errors): Kassel, Germany – August 26, 1945 Dear Frank, I just received your…

I discussed the Federal Reserve’s supervision of liquidity risk at Silicon Valley Bank in an earlier post.  Examiners at least identified liquidity weaknesses at SVB, but supervisors were slow to translate findings into action or to even adjust ratings.  Supervision of interest rate risk was a more complete miss. Interest rate risk (IRR) represents a…

On April 28, 2023, Michael Barr, the Federal Reserve Vice-Chair for Supervision, issued his long-awaited post-mortem of the Silicon Valley Bank failure.  The FDIC issued its post-mortem for Signature Bank the same day.  There’s a lot to unpack here, with the Barr Report running 118 pages, plus numerous supporting documents.  I’ll cover the report in…

The Federal Reserve District Banks are quasi-public entities that provide liquidity and other services to their member banks but also act as the primary federal regulator for many of those same banks.  The dual roles as a bankers’ bank and as a regulator create the potential for conflict of interest.  That conflict became apparent as…

David Letterman used to run a segment called “Brush with Greatness.”  Dave would interview members of the studio audience, who would recount a chance meeting with some celebrity.  Getting interviewed about it on national TV by David Letterman was probably a bigger deal for those folks than the original celebrity encounter. My own connections to…

On March 28 and 29, the Senate and House Banking Committees held hearings on the collapse of Silicon Valley Bank and, to a lesser extent, Signature Bank.  The hearings ran a total of seven hours.  I watched the hearings, so you don’t have to.  Testifying were the Federal Vice Chair for Supervision, Michael Barr, FDIC…

Following the failure of Silicon Valley Bank and Signature Bank, the Federal Reserve announced the Bank Term Funding Program.  According to the Fed’s press release, the BTFP was created to “support American businesses and households” and to “bolster the capacity of the banking system to safeguard deposits and ensure the ongoing provision of money and…