More questions (and document requests) for regulators in the wake of SVB and Signature
Some follow up from last week's Congressional hearings.
The Senate and House have each had their first hearing on SVB and Signature Bank as well as the role of regulators and supervisors. Some important details have emerged, including the regulators admitting that they had the tools necessary to prevent the failures, had they used them better. This isn’t the end however, next come questions for the record from members as well as possible document requests from committees or subcommittees. I don’t know what is going to be asked, but if it was me, here is what I would want to know the answer to and documents I would want access to.
(As a side note, in addition to asking QFRs, I would also be using subpoena power to compel information from the regulators. Not because I think they are intentionally hiding things, but because 1. There may be information they can’t share absent a subpoena, especially confidential bank information or information about clients of the banks; and 2. Because there is a natural inclination to view things in a way most favorable to one’s colleagues and institution, and Congress needs to make an independent assessment with all the relevant information, not just what regulators are willing to share absent compulsive process.)
(As a further side note, many of the questions and request for production overlap in terms of topic. Consider this an attempt at using “belt-and-suspenders” to avoid missing anything important.)
And now to the questions:
1. What other resolution methods did the FDIC consider for SVB before adopting its chosen path?
a. Why were these alternatives not used?
2. What options were not considered, and why?
3. If not answered previously, why was Orderly Liquidation Authority not used to allow the SVB holding company to serve as a “source of strength” for the depository?
4. Please list everyone from Treasury, the White House, the FDIC, the Federal Reserve (Including the Federal Reserve Banks in San Francisco and New York), and the California/New York state government (not limited to Department of Financial Protection and Innovation or NYDFS) and any elected official who participated in the discussions on how to respond to SVB’s or Signature’s distress. Please include the date, time, who they spoke with, and as much detail about the conversation as possible.
5. Please list everyone who contacted the White House, Treasury, the FDIC, or the Federal Reserve (including the Federal Reserve Bank in San Francisco and New York) to advocate for protecting the uninsured depositors of SVB and Signature. Please include the date, time, who they spoke with, and as much detail about the conversation as possible.
6. Please provide all communications and correspondence between employees, managers, and leadership of the Federal Reserve Bank of San Francisco and the Federal Reserve Board regarding SVB for the past five years.
a. If not covered above please provide all correspondence between Federal Reserve (including regional banks) employees, managers, and leadership regarding the Matters Requiring Attention, Matters Requiring Immediate Attention, and other citations or other notifications or sanctions provided to SVB for the past five years. Please also provide all correspondence or records discussing the decision not to elevate matters at SVB further.
b. Please provide all correspondence between the Federal Reserve (including regional banks) and SVB regarding supervisory issues for the past five years, including the decision not to escalate the supervisory issues further.
7. Please provide all records and minutes for all board meetings of the San Francisco Federal Reserve Bank for the past five years.
8. Please provide all communications and correspondence between the NYDFS and the FDIC regarding Signature Bank for the past five years.
9. Please provide all minutes and transcripts of the three most recent FSOC meetings that occurred before the failure of SVB.
10. Please provide all internal communications between employees, managers, and leadership of the San Francisco Federal Reserve Bank regarding SVB for the past five years.
11. Please provide all communications or evidence of communications between managers or leadership of the San Francisco Federal Reserve Bank and officers or board members of SVB or its holding company for the past five years.
12. Please provide all communications within the FDIC, Federal Reserve (including regional banks), Treasury Department, the White House, relevant state government officials, state or federal elected officials, and any third party who communicated with the foregoing to advocate for government relief of SVB, Signature, or their depositors, relating to discussion on how to address the failure of SVB and/or Signature as well as discussions of the broader impact of those failures on the banking system.
13. Please provide all correspondence, reports, assessments, notes, or other material created by employees, management, or leadership of the Federal Reserve, including regional banks, regarding SVB and Signature from the past five years.
14. Please provide all correspondence, reports, assessments, notes, or other material created by employees, management, or leadership of the Federal Reserve, FDIC, Treasury, and White House discussing the use or potential use of the systemic risk exemption in the wake of the failures of SVB and Signature.
15. Was the Treasury, Fed, FDIC, or White House aware of who any of the uninsured depositors at SVB were? If so, who was aware, of what depositors were they aware of, when did they become aware, and who did they communicate that information to
16. Please provide any discussion, correspondence, or other information created by any employee, manager, or leadership of the FDIC, Federal Reserve (including regional banks), Treasury, the White House, the California/New York state government (not limited to Department of Financial Protection and Innovation or NYDFS), or any elected official discussing the identities of potential uninsured depositors of SVB or Signature.
17. Which banks and other potential bidders did the FDIC notify about the potential to bid on SVB and Signature and when was each potential bidder notified?
18. Were any conditions placed or implied on potential bidders for SVB or Signature? If so, what were they? Please provide any documents or correspondence reflecting those conditions.
19. Please provide any discussion, correspondence, or other information created by any employee, manager, or leadership of the FDIC, Federal Reserve (including regional banks), Treasury, or the White House, discussing which institutions should, should not, would, or would not be allowed to bid on SVB or Signature and why that determination was made.
20. Is there a current standard for what is required to count as “systemic”? If so, what is it? If not, how would such a determination be made in the future?
21. Is there a circumstance where you would allow a bank to fail if it meant uninsured depositors would take a loss?
22. What reason do we have to believe a failing GSIB would be resolved under Dodd-Frank rules given that we declared a systemic emergency for much smaller, simpler, and less connected banks?