**Fed Admits Its Own Failures, Management Error Behind SVB Collapse, Not "Russian Conspiracy Theories"**
Fed Admits Its Own Failures, Management Error Behind SVB Collapse, Not "Russian Conspiracy Theories"
Shortly after the monumental collapse of Silicon Valley Bank last month, an absurd theory emerged that it was the "first Twitter-fueled bank run (https://www.zerohedge.com/political/no-social-media-had-nothing-do-svbs-implosion-bloomberg)," which, according to CIA-linked (https://twitter.com/zerohedge/status/1636767586430926849) organizations such as the Alethea Group (https://archive.is/wip/vzilB), was amplified by websites such as _ZeroHedge_ for allegedly contributing to "increased online panic about SVB."
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Alethea even shopped a 'dossier' to various media outlets - including _Bloomberg_ (which excluded _ZeroHedge_ from their report (https://www.bloomberg.com/news/newsletters/2023-03-15/russian-media-crypto-scammers-seize-on-svb-panic) following a brief email exchange). And when one 'journalist' _did_ peddle the dossier on Twitter, she was mercilessly mocked as a propagandist.
> You mean a financial newsblog published a number of stories about a significant bank failure? How dare they!!
>
> — Reason and analytics in Dallas (@DallasAnalytics) March 17, 2023 (https://twitter.com/DallasAnalytics/status/1636801458614960151?ref_src=twsrc%5Etfw)
Then, in late March, _**Bloomberg**_ **reported that "SVB's demise swirled on private VC founder networks before hitting Twitter."**
" **It wasn’t phone calls; it wasn’t social media**," said one Silicon Valley startup founder who wishes to remain anonymous. " **It was private chat rooms and message groups.**"
Facts: 1, CIA Alethea: 0
**Now, the Federal Reserve has admitted in a new report (https://www.federalreserve.gov/publications/files/svb-review-20230428.pdf) that its own regulatory failures contributed to SVBs collapse**.
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As the _Wall Street Journal_ (https://www.wsj.com/articles/regulators-to-publish-postmortems-on-silicon-valley-bank-signature-failures-37abe07?mod=djemalertNEWS) reports:
> _**The Federal Reserve’s banking supervisors failed to take forceful action to address growing problems** at Silicon Valley Bank before it collapsed last month (https://www.wsj.com/articles/svb-financial-pulls-capital-raise-explores-alternatives-including-possible-sale-sources-say-11de7522?mod=article_inline), the central bank’s top regulator said, signaling a broad push to toughen rules on the industry._
>
> _Michael Barr, the Fed’s vice chair for supervision, said **supervisors didn’t fully appreciate the extent of the vulnerabilities as SVB grew in size and complexity (https://www.wsj.com/articles/silicon-valley-banks-meltdown-visualized-3da2263b?mod=article_inline).** When supervisors did find risks, they didn’t take sufficient steps to ensure the firm fixed those problems quickly enough, he said in a report Friday._
>
> _**Regulators took control of Santa Clara, Calif.-based SVB on March 10**. The collapse sparked a panic that led to the failure (https://www.wsj.com/articles/signature-bank-is-shut-by-regulators-after-svb-failure-a5f9e0f7?mod=article_inline) of New York-based Signature Bank (https://www.wsj.com/market-data/quotes/SBNY) and an intervention by financial regulators to protect uninsured depositors at both banks._
In fact, **three of the four top takeaways** about the events leading to SVB's collapse are tied to perceived shortcomings with Fed oversight responsibilities.
> _Mr. Barr said **mistakes by Fed regulators were driven in part by the Trump-era changes that generally eased rules on midsize banks**. He also said **a shift in the agency’s culture appears to have resulted in a lighter-touch form of supervision.**_
>
> _Those changes “impeded effective supervision by reducing standards, increasing complexity, and promoting a less assertive supervisory approach,” he said._
Meanwhile, the Fed said while supervisors _had_ identified issues regarding interest-rate risk which contributed to SVB's failure, its own process was "too deliberative" and focused on building too much evidence before taking action. In fact, **SVB had 31 open supervisory findings - or warnings - from regulators** at the time of its failure, a figure 3x that of peer firms, according to the Fed.
> _" **...the Fed overlooked broader problems in recent years as the bank grew.** For example, for a long time, it used metrics for liquidity that suggested SVB had a st…