An iron law of the modern administrative state is that the solution to regulatory failure is always to give regulators more power. That’s the key to understanding Federal Reserve Vice Chair for Supervision Michael Barr’s autopsy, released Friday, of Silicon Valley Bank’s (SVB) failure.
The report offers a token mea culpa for not having responded fast enough to troubles at the bank. But that’s mainly a deflection from the report’s main purpose, which is to protect the Fed and bolster the Biden Administration’s financial regulatory agenda. It concedes that examiners at the San Francisco Fed flagged numerous problems at SVB well before its failure, but it says they were handcuffed by higher-ups in Washington and a 2018 law that eased regulations on mid-sized banks.
