United States Federal Reserve Chair Jerome Powell remarked on Wednesday during his testimony before the House Financial Services Committee that, in his opinion, "very bad management decisions" were crucial in the eventual collapses of banks such as Silicon Valley Bank (SVB) and Signature Bank.
Powell said that those banks' businesses failed because of liquidity issues "among other things," but insisted more on managerial miscalculations. Commenting on Silicon Valley Bank, he underscored that what "triggered" its demise was "significant losses in their securities portfolio." He also pointed out that the banks in question failed to notice they had 90% of uninsured deposits.
Asked if he believes that increasing capital requirements could have stopped the end of those banks' businesses, Powell admitted that such a move "might have helped" but stressed that it is "very hard to say by how much." He also declined to answer if he believes such an increase is necessary at the moment.
