Fed criticized for missing red flags before bank collapse

By CHRISTOPHER RUGABER and FATIMA HUSSEIN
Associated Press

WASHINGTON (AP) — The Federal Reserve is facing stinging criticism for missing what observers say were clear signs that Silicon Valley Bank was at high risk of collapsing into what became the second-largest bank failure in U.S. history. The Fed was the primary federal supervisor of the bank, based in Santa Clara, California, though the bank was also overseen by the California Department of Financial Protection and Innovation. Critics point to many red flags that had surrounded Silicon Valley Bank, including its rapid growth since the pandemic, its unusually high level of uninsured deposits and its over-investment in long-term government bonds and mortgage-backed securities, which tumbled in value as interest rates rose.