If you think I’m tough on the Fed…
I like Jeff, although sometimes I want to throw things at him. I think most of our disagreements are semantic. Regardless, his lack of respect for the Federal Reserve rivals mine, so I can find common ground.
So Snider mentions favorably the questioning of Vice Chair of the Federal Reserve Michael Barr by Senator Katie Britt, in this C-Span video (from March 28. Her questions start about two-hours in.)
“We have a crisis, and you come in here without knowing whether or not you did your job. You say you want more.”
“I find it concerning, though, when you all were asked, each one of you was asked, ‘would you like to see more powers, more (regulatory) strength in this?’ Every single one of you said ‘yes’ when you don’t actually know if you utilized the tools in your toolbox correctly, or if the people that were under your supervision were supervising appropriately,” Britt said. “I think that’s what people hate about Washington. We have a crisis, and you come in here without knowing whether or not you did your job. You say you want more. That’s not the way this works. You need to be held accountable, each and every one of you.”
“If the outside sector knew this was happening, you and the Fed and the 4,000 examiners should have known that this was coming as well.”
“Six months prior (to the bank failure), JP Morgan noticed that there was a problem,” Britt told Martin Gruenberg, chairman of the Federal Deposit Insurance Corporation. “Their equity research team, and then Moody’s obviously met with SVB prior to saying that they were going to downgrade. So I’ve heard y’all say this was a rushed process. If the outside sector knew this was happening, you and the Fed and the 4,000 examiners should have known that this was coming as well.”
As Jeff Snider says, I don’t know anything about Senator Britt, but on this topic, she was great. Most Congressfolk just kiss the Fed’s posterior and ask for free candy.
Sadly, Congress will still probably give the Fed even more power now (and it’s not like the Fed has ever hesitated to do whatever they want anyway. The Fed has a printing press -given to them by Congress - and Congress loves free stuff.)
The excellent and not-Republican WallStreetOnParade website tried to warn us about Michael Barr: Biden Has Nominated a Man from the Sandy Weill/Robert Rubin/Tim Geithner School of Wall Street Hubris to Head Regulation at the Fed
On a related note, an interesting analysis of the SVB failure from a bankruptcy perspective:
“The FDIC Was Left Holding The Bag”
The Reorg Primary View: the SVB Financial Filing: Valuation, Claims, NOLs and Bond Prices and More
I’ll have a bit more on non-regulation by Fed regulators in a subscriber post later today.
The FDIC was left holding the bag.