The Nation's Top Financial Regulator Pledges to Protect Depositors and the Banking System

　　Regulators Prepared to Take Necessary Steps to Ensure System Safety

　　In the wake of the recent financial turmoil triggered by the collapse of two large banks in the United States and Europe, the nation's top financial regulator, Michael Barr, has pledged that the Federal Reserve and other agencies will take whatever steps necessary to protect depositors and the banking system.

　　Senate Banking Committee to Hold Hearing on Bank Failures

　　The Senate Banking Committee will hold its first formal congressional hearing on the failures of Silicon Valley Bank and New York-based Signature Bank. The hearing will focus on the shortcomings of supervision and regulation by the Fed and other agencies that preceded the bank collapses.

　　Fed Criticized for Inadequate Supervision of Silicon Valley Bank

　　The Fed has come under fire from groups advocating tighter financial regulation for failing to adequately supervise Silicon Valley Bank and prevent its collapse. Fed Vice Chair for Supervision Michael Barr is likely to face tough questioning from members of both parties during the hearing.

　　Barr Blames Bank Management for Failure, Acknowledges Supervisory Failures

　　In his prepared testimony, Barr placed the blame for Silicon Valley Bank's failure on the bank's management. However, he also acknowledged that the Fed would "fully account for any supervisory or regulatory failings" in a previously announced review of the bank's collapse.

　　Warnings Issued to Silicon Valley Bank about Risky Practices

　　Barr revealed that officials at the Federal Reserve Bank of San Francisco, which directly supervised Silicon Valley Bank, had sent multiple warnings to the bank's management about the risks it was taking, including its substantial holdings of Treasurys and other bonds that were losing value as interest rates rose.

　　Unexpected Bank Run Led to Collapse

　　Ultimately, when large depositors sought to withdraw more than $40 billion in a single day, the bank couldn't pay out the funds, leading to its seizure by the Federal Deposit Insurance Corp. on March 10.

　　Fed Staffers Warned of Rising Rates Threatening Bank Finances

　　Barr also disclosed that, as early as mid-February 2023, Fed staffers had warned the central bank's board of governors that rising rates were threatening the finances of some banks, specifically highlighting the risk-taking at Silicon Valley Bank.

　　Full Extent of Vulnerability Not Apparent Until Bank Run

　　However, Barr admitted that "the full extent of the bank's vulnerability was not apparent until the unexpected bank run on March 9."