prepare a report to supplement the limited internal review to fully understand the failure of svb. this would be a logical next step in holding ourselves accountable and would help to eliminate the doubts that may naturally accompany any self - assessment prepared and reviewed by a single member of the board of governors. 13 this external independent report should also cover a broader time period, including the events of the weekend following the failure of svb, and a broader range of topics beyond just the regulatory and supervisory framework that applied to svb, including operational issues, if any, with discount window lending, fedwire services, and with the transfer of collateral from the federal home loan banks. second, i believe we need to do a better job identifying the most salient issues and moving quickly to remediate them. it is clearly evident that both supervisors and bank management neglected key, long - standing risk factors that should be an area of focus in any examination. these include concentration risk, liquidity risk, and interest rate risk. we have the see government accountability office, “ bank regulation : preliminary review of agency actions related to march 2023 bank failures ” gao - 23 - 106736 ( washington : government accountability office, april 2023 ), https : / / www. gao. gov / assets / gao - 23 - 106736. pdf ; federal deposit insurance corporation, “ fdic ’ s supervision of signature bank ” ( washington : federal deposit insurance corporation, april 28, 2023 ), https : / / www. fdic. gov / news / press - releases / 2023 / pr23033a. pdf ; michael barr, vice chair for supervision of the board of governors of the federal reserve system, “ review of the federal reserve ’ s supervision and regulation of silicon valley bank ” ( april 28, 2023 ), https : / / www. federalreserve. gov / publications / files / svb - review20230428. pdf. as noted in vice chair for supervision michael barr ’ s review of the supervision and regulation of silicon valley bank, “ [ the ] report was written with the benefit of hindsight on the particular facts and circumstances that proved most relevant for svb and svbfg. the report was prepared in a compressed time frame from march 13, 2023, through april 28, 2023, and further work over a longer period could draw additional or different conclusions. ” barr, review of the federal reserve ’ s supervision and regulation of silicon

service partnerships — where the bank partners with a nonbank company, often a fintech, to offer new products and services. even without these external influences, bankers who leverage innovation as a significant aspect of their business model often have a mindset that is compatible with continued innovation and are less sensitive to regulatory and supervisory communications. i view these trends as part of a cultural shift within these banks. some innovators espouse an “ ask for forgiveness, not permission ” mentality when it comes to regulation and compliance. this is a particularly dangerous mindset when it comes to banking. bank supervisors often rely on their interactions with bankers to communicate see michelle w. bowman, “ the innovation imperative : modernizing traditional banking ” speech at the independent community bankers of america icba live 2023 conference, honolulu, hawaii ( march 14, 2023 ), https : / / www. federalreserve. gov / newsevents / speech / files / bowman20230314a. pdf. - 9supervisory concerns. this enables supervisors to provide feedback to bank management before these issues escalate and are cited in examination reports and as matters requiring attention ( mras ), matters requiring immediate attention ( mrias ), or enforcement actions. but bank management must be receptive to these supervisory messages and should take proactive measures to address the issues identified. this kind of proactive approach may not be the most natural reaction for those who have been successful in a less - regulated tech or start - up environment. the policy response given the recent banking sector stress, it is clear that we need to review the bank regulatory and supervisory framework to determine whether updates are needed. as we consider potential changes to improve supervision and regulation, we should start from a baseline understanding of the available tools and determine whether those tools have been utilized and implemented effectively. before regulators seek new tools, it is necessary to understand the need — how would the use of those new tools address deficiencies in the existing regulatory toolkit? imposing additional requirements on regulated institutions without understanding this need results in additional costs and can have unintended consequences like encouraging bank consolidation and constraining credit availability to critical business activities or geographies. in addition to these unintended consequences, we also need to carefully consider the broader implications of regulatory change for financial stability. the policy response to a crisis should be multifaceted, as changes to different elements of supervision and regulation in combination may be the most efficient and effective response