Keep watch over banks, but try not to alarm anyone.
That is how bank regulators appeared to view their duties in the lead-up to last month’s banking crisis, at the center of which were the failures of Silicon Valley Bank in California and Signature Bank in New York.
For years, federal regulators overseeing Silicon Valley Bank pointed out its many flaws using language whose impact appeared heavily blunted by technical jargon. They identified a slew of problems, but their findings lacked urgency. They gave the bank’s leaders long timelines to fix things, delivered overall safety and soundness ratings at a plodding pace and seemed unwilling to draw big conclusions about the many accumulating problems.
A similar story unfolded in New York, where supervisors in charge of monitoring Signature Bank’s activities slow-walked regulatory reports and failed to spur the bank’s senior leaders to fix problems they had identified.
Here are some takeaways from reviews released on Friday by the Federal Reserve, the Federal Deposit Insurance Corp. and the U.S. Government Accountability Office.