The bankruptcy of the American bank SVB, which led to a crisis in the global banking sector, is a “textbook example of bad management”, according to the vice president of the Fed for banking regulation, Michael Barr, quoted by AFP.

In addition, “the failure of SVB shows the need to move forward in our work to improve the stability of the banking system,” the US central bank official told Congress on Tuesday, according to his speech released on Monday. .

Michael Barr was one of the creators of the Dodd-Frank law, adopted after the financial crisis of 2008-2009 to better supervise the activities of large American banking institutions. In 2018, this reform was canceled by former President Donald Trump.

“For example, it is critical that we propose and implement final Basel III reforms that better reflect business and operational risks in our assessments of banks’ capital requirements,” the Fed vice president said.

Basel III, a wide range of international banking sector reforms, was launched after the 2008-2009 financial crisis to strengthen the reliability of banks. Many steps have been taken, but some reforms are not yet complete, especially in the United States.

Among the measures to be implemented, Michael Barr should also mention that the Fed plans to offer “long-term debt obligations” to large banks that are not part of the club of thirty systemic institutions, also known as “too big to fail”. .

This would give them “resources to absorb the losses to support their stabilization and allow them to resolve the problem in a way that does not pose a systemic risk,” he said.

In addition, “recent events have shown that we need to evolve our understanding of the banking sector in light of changing technologies and new risks,” the Fed vice chairman added.

The Fed is conducting a bankruptcy review of SVB and is expected to release its findings on May 1.

The work to date has highlighted that “SVB had inadequate risk management and internal controls that struggled to keep up with the bank’s growth,” Michael Barr is expected to tell the US Senate Banking Committee.