The Federal Reserve’s head of banking oversight, Michael Barr, has called for a thorough overhaul of how US banks are monitored following the failure of Silicon Valley Bank (SVB). The default was attributed to the firm’s weak risk management and oversight delays by the Fed.
In a letter, Barr announced that the central bank would review the set of rules applicable to companies with assets over $100 billion, including the stress test and liquidity requirements. SVB’s bankruptcy demonstrates the need to apply stricter standards to a wider set of companies.
Barr also suggested that the regulator could require additional capital or liquidity, or limit share buybacks, dividends or executive compensation for companies with inadequate capital planning and risk management.