SVB and Signature: We’ll Know Soon How Isolated These Issues Are Says SOTE’s Kathy Dick
Investigations into the bank failures at Silicon Valley Bank and Signature Bank continue this week, with hearings in front of the US Senate Banking Committee and US House Financial Services Committee. Recently, Kathy Dick, SOTE Founder & CEO, had the opportunity to speak with Kyle Campbell at the American Banker and offer her thoughts on the continued debate about whether regulators need additional tools to avoid situations like Silicon Valley Bank and Signature Bank. You can access the full article here.
Kathy’s assessment: We’ll know in the next couple of months how isolated the issues are, and what the regulators have identified as vulnerabilities either in the bank’s own risk management or in their supervision. She also believes that based on what we know today, and assuming that these are largely isolated cases, she would not rush to change rules. Kathy thinks the regulators have a lot of tools and have an ability to request a bank they supervise to do whatever they think that bank should be doing with respect to risk management. So, establishing new rules for the industry, in her view right now, doesn’t appear to be something that’s needed.
Kathy acknowledged that, “We might get information in the next couple of months that will change my mind, but right now, I think regulators have the authority and the tools they need. And I suspect what we’re going to find is there were some risk management gaps within these institutions. And the regulators might find that they didn’t have the right talent covering banks with higher risk profiles.” She also noted that sometimes disconnects occur in bank supervision and that this is not uncommon.
“Hopefully, calmer views will prevail and if there are rulemaking changes that need to happen, that will happen. don’t see any rulemaking change right now that I think would be appropriate, given what we know. But I’m sure some parties will be clamoring for it.”
Campbell, K. (2023, March 27). Isolated issues or systemic risks? The Fed’s framing conundrum. American Banker.
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