The Federal Reserve Board said on Monday that Vice Chair for Supervision Michael Barr will lead a review of the collapse of Silicon Valley Bank.
Barr will examine the supervision and regulation of the California bank that worked closely with startups and the venture capital industry.
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"We need to have humility, and conduct a careful and thorough review of how we supervised and regulated this firm, and what we should learn from this experience," said Barr.
The review will be released to the public by May 1.
"The events surrounding Silicon Valley Bank demand a thorough, transparent, and swift review by the Federal Reserve," said Fed Chairman Jerome Powell in a statement.
SVB’s failure is the second-largest of a bank in U.S. history and has shaken many investors. It was the result of a bank run, caused by the firm’s announcement that it failed to raise the additional capital to increase liquidity.
Silicon Valley Bank made investments into long-dated government securities, including Treasuries. The sale of them led to a $1.8 billion loss and the California bank attempted to raise $2.25 billion in capital by issuing new common and convertible preferred shares to cover the shortfall.
Depositors made a run on the bank, withdrawing their cash and transferring it into other banks last week.
Federal regulators, including the Federal Reserve, said Sunday evening that all depositors would receive 100% of their funds that were in SVB, even the uninsured amounts. The FDIC insures deposits up to $250,000.
In a joint statement Sunday, Secretary of the Treasury Janet Yellen, Federal Reserve Board Chair Jerome Powell, and the Federal Deposit Insurance Corporation (FDIC) Chairman Martin Gruenberg, unveiled a plan to try to avoid contagion from SVB's collapse.
"We are taking decisive actions to protect the U.S. economy by strengthening public confidence in our banking system. This step will ensure that the U.S. banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth," the joint statement said.
The plan will also apply to Signature Bank, New York, New York, another bank that the regulators said they shut down on Mar. 12.
Regulators have insisted that there will be no SVB bailout.
"No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer," Yellen, Powell and Gruenberg said in their joint statement.
About $42 billion of deposits were withdrawn by the end of March 9, according to a regulatory filing. By the close of business that day, SVB had a negative cash balance of $958 million.
The FDIC took control and is now the manager of $175 billion in customer deposits, including money from several startups and from some of the biggest names in the technology world.
More than 95% of the bank's deposits were uninsured as of December, according to regulatory filings, leaving the majority of SVB's customers wondering if they would recoup their money until Sunday night when the Fed assured they would be covered.
