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March 13, 2023

The Federal Reserve Cannot Investigate Itself for its Failure to Properly Supervise Silicon Valley Bank; An Independent IG Needs to Be Appointed ASAP

WASHINGTON, D.C.— Dennis M. Kelleher, Co-founder, President and CEO, issued the following statement in connection with the Federal Reserve’s (Fed) announcement of investigating itself for its failures in connection with the collapse of Silicon Valley Bank (SVB).

“Federal Reserve supervision utterly failed in connection with the collapse of Silicon Valley Bank (SVB), as detailed here, and likely at other banks.  The consequences of those many failures continue to inflict damage across the country and that requires a thorough and independent investigation of the Fed to determine how that could have happened and to make sure it never happens again.

“To avoid such an investigation and evade accountability, Fed Chair Powell announced that the Fed was going to investigate itself.  Of course, it can’t credibly do that. Moreover, Chair Powell’s imposition of an artificial and quick deadline of just six weeks for the completion and release of the self-investigation’s public report on May 1st raises very troubling questions as to the genuine commitment to a thorough investigation.  Additionally, there is no one at the Fed who is sufficiently independent to do this much-needed investigation, including the Fed’s Inspector General (IG), who is a Fed employee who serves at the pleasure of Chair Powell.  That was proved recently by the Fed IG’s very narrow, incomplete and misleading so-called investigation predictably exonerating Chair Powell and former Vice Chair Clarida for their personal stock sales in 2020 while the Fed was undertaking extraordinary measures during the pandemic.

“The Fed must cease its self-investigation and immediately ask the Chair of the Council of the IGs on Integrity and Efficiency (CIGIE), the Honorable Mark Lee Greenblatt, to appoint an IG independent of the Fed like the widely respected, nonpartisan DOJ IG Michael Horowitz to conduct a thorough investigation of the failures of Federal Reserve supervision.  If for any reason this is not an option, President Biden should appoint a respected, nonpartisan expert without any affiliation with the Fed or the financial industry to conduct the investigation and release a report to the American people, who are suffering the consequences of the Fed’s failures.”

Correction: An earlier version of this press release inaccurately identified Mr. Horowitz as the Chair of the CIGIE.  He is a former Chair and Mr. Greenblatt is the current Chair.

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