On Wednesday’s broadcast of CNN’s “Situation Room,” Harvard Professor, economist, Director of the National Economic Council under President Barack Obama, and Treasury Secretary under President Bill Clinton Larry Summers said that the failure of Silicon Valley Bank “was a failure of supervision on the ground” and it makes no sense that the bank’s CEO, Greg Becker, was allowed to serve on the San Francisco Federal Reserve’s board.
Summers stated, “I don’t think it was largely a matter of broad policies. It was a failure of supervision on the ground. When a bank has no chief risk officer for nine months during a highly risky period where its deposits have nearly doubled in size, the authorities are supposed to do something. And they didn’t see what were actually quite obvious risks in that institution, and I think there needs to be very careful investigation of the individuals who bore responsibility directly for the supervision of the bank and those who supervise them.”
He added, “I do think it’s an old issue, and…I’m not usually on the populist side of things, but I have to say, I don’t get why [the] President of Silicon Valley Bank should be on the board of the San Francisco Fed and I don’t get why such a person should be permitted to stay on the board of the San Francisco Fed after the San Francisco Fed is involved in giving his bank very substantial warnings. So, I think that needs to be looked at.”
Follow Ian Hanchett on Twitter @IanHanchett
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