The Department of Financial Protection and Innovation in California announced on Monday that it will conduct a comprehensive review of its own oversight and regulation of Silicon Valley Bank. The regulator will issue a report on the review’s findings by early May. The statement also said that the review will focus on examining how to strengthen and update the state’s system of financial regulation to meet emerging and evolving challenges.
Silicon Valley Bank, which provides banking services to technology and life science companies, has been under scrutiny by regulators over the past year. In November, the Federal Reserve issued a cease and desist order against the bank for deficiencies in its risk management and compliance processes. The bank was also fined $60 million by the New York Department of Financial Services for anti-money laundering violations in December.
The California regulator’s review comes at a time of increased scrutiny on the banking industry’s role in the technology sector. The rise of fintech companies has raised concerns about consumer protection and systemic risk. The review is expected to provide insights into how regulators can better oversee and regulate financial institutions in the tech industry.
The Department of Financial Protection and Innovation was created in 2019 as part of California’s efforts to strengthen consumer protection and financial regulation. The department has broad authority over financial institutions operating in the state, including banks, credit unions, and payday lenders.
The announcement of the review of Silicon Valley Bank comes after a turbulent year for the bank and the broader banking industry. The COVID-19 pandemic has put pressure on banks to provide support to struggling businesses, while also raising concerns about the resilience of the banking system.
The California regulator’s report will be closely watched by regulators and industry participants alike, as it could provide insights into how to improve oversight of the tech industry’s banking activities. It may also serve as a template for other regulators looking to strengthen their own oversight of the banking industry.
