In the first congressional hearing into the collapse of two US regional lenders and the ensuing market chaos, the top banking regulator at the Federal Reserve criticised Silicon Valley Bank on Tuesday over its faulty risk modelling.
"They were issued a matter requiring immediate attention based on the inaccuracy of their interest rate risk modelling," Michael Barr, the Federal Reserve's vice chairman for supervision, told legislators.
"Essentially, the risk model was not at all aligned with reality."
Mr Barr said he was first made aware of the interest rate risk-related issues at Silicon Valley Bank in mid-February, just weeks before its failure.
"The staff highlighted the interest-rate risk that was present at Silicon Valley Bank and indicated that they were in the middle of a further review," he said.
Supervisory staff at the Fed had previously raised serious concerns over SVB's interest-rate risk and liquidity management, and demanded fixes from the bank in November 2021, Mr Barr said.
In mid-2022, Fed staff deemed the bank's management to be deficient and barred the lender from growing through mergers or acquisitions, he said.
Fed supervisors took those issues to SVB's chief financial officer in October 2022, Mr Barr said, and raised other concerns to SVB management in November.
"I believe that is the first time that I was told about interest-rate risk at Silicon Valley Bank."
Mr Barr and Federal Deposit Insurance Corporation chairman Martin Gruenberg indicated that they were looking into tightening rules for banks and applying stricter oversight for companies similar to SVB.
The hearing was the first of what is expected to be several into the banking tumult.
The House financial services committee will hear from the same regulators on Wednesday, and congressional leaders have already said they want to question former chief executives of the two banks on what went wrong.
Reuters contributed to this report
Other acts on the Jazz Garden bill
Sharrie Williams
The American singer is hugely respected in blues circles due to her passionate vocals and songwriting. Born and raised in Michigan, Williams began recording and touring as a teenage gospel singer. Her career took off with the blues band The Wiseguys. Such was the acclaim of their live shows that they toured throughout Europe and in Africa. As a solo artist, Williams has also collaborated with the likes of the late Dizzy Gillespie, Van Morrison and Mavis Staples.
Lin Rountree
An accomplished smooth jazz artist who blends his chilled approach with R‘n’B. Trained at the Duke Ellington School of the Arts in Washington, DC, Rountree formed his own band in 2004. He has also recorded with the likes of Kem, Dwele and Conya Doss. He comes to Dubai on the back of his new single Pass The Groove, from his forthcoming 2018 album Stronger Still, which may follow his five previous solo albums in cracking the top 10 of the US jazz charts.
Anita Williams
Dubai-based singer Anita Williams will open the night with a set of covers and swing, jazz and blues standards that made her an in-demand singer across the emirate. The Irish singer has been performing in Dubai since 2008 at venues such as MusicHall and Voda Bar. Her Jazz Garden appearance is career highlight as she will use the event to perform the original song Big Blue Eyes, the single from her debut solo album, due for release soon.
Dubai World Cup Carnival card
6.30pm: UAE 1000 Guineas Trial Conditions (TB) US$100,000 (Dirt) 1,400m
7.05pm: Handicap (TB) $135,000 (Turf) 1,000m
7.40pm: Handicap (TB) $175,000 (D) 1,900m
8.15pm: Meydan Challenge Listed Handicap (TB) $175,000 (T) 1,400m
8.50pm: Dubai Stakes Group 3 (TB) $200,000 (D) 1,200m
9.25pm: Dubai Racing Club Classic Listed Handicap (TB) $175,000 (T) 2,410m
The National selections
6.30pm: Final Song
7.05pm: Pocket Dynamo
7.40pm: Dubai Icon
8.15pm: Dubai Legacy
8.50pm: Drafted
9.25pm: Lucius Tiberius
