Welcome to Innovating Payments Top 3 News Headlines for the Week of March 19, 2023. In this issue, we learn that Silicon Valley bank's risky practices were on the Federal Reserve's radar for more than a year. The Fed issued six citations, alerting the bank to vulnerabilities, including ensuring the institution would have enough cash on hand should a need arise.
Meanwhile the U.S. House Financial Services Committee is set to begin investigating two high-profile banking failures-Silicon Valley Bank and Signature Bank. Also in the news, The Federal Reserve, The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, and the Swiss National Bank announced a coordinated action to enhance the provision of liquidity via the standing U.S. dollar liquidity swap line arrangements.
Read on to learn more.
1. Before Collapse of Silicon Valley Bank, the Fed Spotted Big Problems (New York Times)
Silicon Valley Bank's risky practices were on the Federal Reserve's radar for more than a year - an awareness that proved insufficient to stop the bank's demise. The Fed repeatedly warned the bank that it had problems, according to a person familiar with the matter. In 2021, a Fed review of the growing bank found serious weaknesses in how it was handling key risks. Supervisors at the Federal Reserve Bank of San Francisco, which oversaw Silicon Valley Bank, issued six citations. (Read more.)
2. House Looks to 'Get to Bottom' of Banking Collapses (PYMNTS)
The U.S. House Financial Services Committee is set to begin investigating two high-profile banking failures. Rep. Patrick McHenry, who chairs the committee, and Rep. Maxine Waters, its ranking member, announced Friday (March 17) that they'll hold a hearing looking at the collapse of Silicon Valley Bank (SVB) and Signature Bank. Witnesses at the hearing, scheduled for March 29, will include Martin Gruenberg, chair of board of directors at the Federal Deposit Insurance Corporation (FDIC), and Michael S. Barr, vice chair for supervisors at the Federal Reserve's board of governors. (Read more.)
3. Coordinated Central Bank Action to Enhance the Provision of U.S. Dollar Liquidity (The Federal Reserve)
The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank are today announcing a coordinated action to enhance the provision of liquidity via the standing U.S. dollar liquidity swap line arrangements. To improve the swap lines' effectiveness in providing U.S. dollar funding, the central banks currently offering U.S. dollar operations have agreed to increase the frequency of 7-day maturity operations from weekly to daily. (Read more.)
What steps is your financial institution taking to mitigate risk? What conversations has this week's news raised in your financial institution?
Check back soon for our next issue, highlighting the industry's most pressing and need-to-know developments. Until then, visit us online at Innovating Payments.
AUTHOR: Joe Casali, AAP, NCP
Executive Vice President
As the EVP of Payments Innovation for NEACH, Joe focuses on exploring innovative solutions and technologies that will help position members for success, both now and in the future. Connect with Joe to read more of his blogs, articles, and posts.