Powell Faces Bipartisan Chorus Calling for Independent SVB Probe

Federal Reserve Chair Jerome Powell faces growing calls from key lawmakers and regulatory experts for an independent investigation into the collapse of Silicon Valley Bank, not just an internal review by the Fed board.

“One hundred percent needs to be an outside look at it,” said Senator Jon Tester of Montana, a senior Democrat on the Banking Committee, which has Fed oversight authority. “Let the Fed look at it, but it needs to be somebody on the outside that looks at it.”

Powell announced March 13 that Michael Barr, the Fed’s vice chair for supervision, would lead an internal review of the supervision and regulation of SVB, which was overseen by the San Francisco Fed and California state regulators. Treasury and Fed officials raced last weekend to contain the fallout from the collapse of the nation’s 16th-largest lender, which has rocked markets and resulted in a temporary but massive expansion of the federal bank safety net.

The central bank’s decision to keep the probe in house has raised questions about potential conflicts, as lawmakers on both sides of the aisle seek more details about what went wrong.

“Their lack of transparency and the fact that their bank examination role missed, somehow failed to address, the issues with SVB indicates that an outside look is warranted,” said Senator Cynthia Lummis of Wyoming.

“Somebody was asleep at the switch,” Tester said.

Senator Chris Van Hollen, a Maryland Democrat, said “at the very least it should be the Justice Department and not only the Fed participating in the review.”