The bankruptcy of the American bank SVB, which led to a crisis in the global banking sector, is "
a textbook case of mismanagement
", according to the vice president of the Fed in charge of banking regulation Michael Barr.
In addition, "
the failure of SVB shows the need to move forward in our work to improve the resilience of the banking system
", must say this official of the American central bank Tuesday before Congress, according to his speech published Monday .
Michael Barr was one of the architects of the Dodd-Frank law, passed after the financial crisis of 2008-2009 to better regulate the activity of major American banking institutions.
This reform was then unraveled in 2018 by former President Donald Trump.
“
For example, it is essential that we propose and implement the final reforms of Basel III, which will better reflect commercial and operational risks in our assessments of the capital needs of banks”, must specify the vice president of the Fed
. .
“
Basel III
”, a wide range of international banking sector reforms, was launched after the financial crisis of 2008-2009 in order to strengthen the soundness of banks.
Many measures have been taken but some reforms still need to be finalized, especially in the United States.
Among the measures to be put in place, Michael Barr must also mention the fact that the Fed plans to propose "
a long-term debt requirement
" for large banks that are not part of the club of thirty systemic institutions, also called "
too big" .
to fail
” (“
too big to fail
”).
This would allow them to have “
loss-absorbing resources to support their stabilization and enable resolution in a way that does not pose systemic risk
,” he added.
“SVB had inadequate risk management and internal controls...”
Moreover, "
recent events have shown that we must change our understanding of the banking sector in light of the evolution of technologies and emerging risks
", should further indicate the vice-president of the Fed.
The Fed is conducting an analysis of SVB's bankruptcy and expects to release its findings on May 1.
The work carried out so far has brought to light the fact that "
SVB had inadequate risk management and internal controls which were struggling to keep pace with the growth of the bank
", must detail Michael Barr before the banking commission of the US Senate.
“
We are focused on whether Federal Reserve oversight was appropriate for the bank's rapid growth and vulnerabilities
,” he said.
"
We have to ask ourselves why the bank has not been able to solve (...) the problems that we had identified in sufficient time
", he will underline, indicating that the resolution of the problems "
does not is not the job of the regulators
" but "
of the bank's management and board
".
