On Thursday’s broadcast of CNBC’s “Squawk on the Street,” Federal Reserve Bank of San Francisco President and CEO Mary Daly responded to a question on why the weaknesses in Silicon Valley Bank weren’t identified by stating that while there are some changes needed, the overwhelming majority of banks “did manage their risks well.”

Host Sara Eisen asked, “Barr’s report did trace the problem to, ‘widespread managerial weakness[es],’ And I know you just laid out that it wasn’t under your purview and you couldn’t be directly involved, but your team was, right? As supervisors. This was a fully supervised and regulated bank. So, how come managerial weakness and negligence wasn’t spotted?”

Daly responded, “So, the first thing to know is that there are over 4,500 banks in the United States that did manage their risks well. And three banks, Silicon Valley being one of them and the Fed bank did not manage its risk well. And as the vice chair’s report squarely starts with, that is the responsibility of the management of Silicon Valley Bank.”

She continued, “Now, supervision, and I would say Fed supervision, the Board of Governors working collaboratively with the Federal Reserve Bank of San Francisco teams, has also responsibilities. And those two things that I think are really critical are the two things that are identified in the report: First, identifying emerging risks. … The second is, when you identify those — and many were identified — be more forceful in ensuring that management is fixing those issues so that the kinds of things that happened at Silicon Valley don’t happen.”

Daly concluded, “But if you ask why did Silicon Valley Bank fail? It ultimately failed because depositors lost confidence in the solvency of the institution and decided, in the course of a day, to withdraw their funds. And that is a failure recipe for the bank, and we can trace it first back to management, and then there [are] a lot of things that we can learn about how to supervise more effectively as we look forward into the risks and manage those properly.”

Daly also argued that supervisors and Reserve bank heads need to communicate better.

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