1. This testimony uses "Silicon Valley Bank (SVB)" to refer to both the state member bank, Silicon Valley Bank, and its bank holding company, SVB Financial Group. Return to text
2. Typically, the Board does not disclose confidential supervisory information. We are sharing confidential supervisory information in the case of SVB because the bank went into resolution, and its disorderly failure posed systemic risk. Return to text
3. By year-end 2022, the firm's investment portfolio represented over 55 percent of its total assets. Return to text
4. Supervisory findings include Matters Requiring Attention (MRA) and Matters Requiring Immediate Attention (MRIA). An MRA is "a call for action to address weaknesses that could lead to deterioration in a banking organization's soundness." An MRIA is "a call for more immediate action to address acute or protracted weaknesses that could lead to further deterioration in a banking organization's soundness, may result in harm to consumers, or have caused, or could lead to, noncompliance with laws and regulations." MRAs and MRIAs typically are the first step in communicating supervisory findings to a firm. When a bank has a weakness, supervisors decide whether to assign an MRA or MRIA—and the timeline for remediation—depending on the severity of the issue. The number of MRAs and MRIAs per firm is variable and largely reflects the extent of risk-management weaknesses of a firm. While most MRAs and MRIAs are resolved without further escalation, to the extent not resolved, they can serve as the basis for provisions included in a public enforcement action. See Board of Governors of the Federal Reserve System, Supervision and Regulation Report (PDF) (Washington: Board of Governors, November 2019), at 21. Return to text
5. 12 U.S.C. § 1843(m), 12 C.F.R. § 225.83. The growth restrictions under section 4(m) apply to the expansion of nonbank activities through merger and acquisition. Return to text
6. A full scope examination is an assessment of safety and soundness of a bank and includes an evaluation of financial condition, risk management and control. A target examination is an assessment of a particular area or risk within a firm. Return to text
7. A horizontal review is an examination in a particular area or risk that is coordinated across several firms. Horizontal reviews also provide a clear picture of the relative risk in an individual firm and allow supervisors to align supervisory expectations with the firm's risk profile. For more information, see Board of Governors of the Federal Reserve System, Supervision and Regulation Report (PDF) (Washington: Board of Governors, May 2019), at 18. Return to text
8. SR letter 12-17 / CA 12-14, "Consolidated Supervision Framework for Large Financial Institutions." Return to text
9. Michael S. Barr, "Supporting Innovation with Guardrails: The Federal Reserve's Approach to Supervision and Regulation of Banks' Crypto-related Activities" (speech at the Peterson Institute for International Economics, Washington, D.C., March 9, 2023). Return to text
10. Previously, SVB was in the $50 billion to $100 billion category, which under the statutory tailoring framework does not require a resolution plan, stress testing, or liquidity rules. Return to text
11. To be subject to enhanced prudential standards, a bank holding company's assets must exceed $100 billion on a four-quarter rolling average. The phase-in for stress testing is roughly two years and was unchanged by the 2019 rule changes. However, moving to an every-other-year stress test for Category IV firms can result in another year lag if the phase-in period concludes in an odd-numbered year. Return to text
12. The banking agencies include the Board, the FDIC, and the Office of the Comptroller of the Currency. Return to text
13. Michael S. Barr, "Why Bank Capital Matters" (speech at the American Enterprise Institute, Washington, D.C., December 1, 2022). Return to text