SF Fed Pursues Happiness by Overseeing Problems and Hunting War Criminals While Navigating Bureaucracy.

Fed officials in Washington, as well as the San Francisco Fed, were at fault for overseeing the failure of the Silicon Valley Bank (SVB). .

Over the past few years, the San Francisco Fed has seen a turnover of oversight officials under Mr. Daly, who prioritized improving relationships among staff rather than recruiting more experienced bank supervisors, according to people familiar with the matter. Staff in Washington told several officials of their concerns about Daley’s management of the Fed, according to four people familiar with the matter.

“There has been significant oversight,” said Tarullo, a former Fed governor. He told Bloomberg Television last week that stress tests for banks vulnerable to spikes in interest rates had been inadequate.

SVB problem, officials warned months ago – SF Fed replaces coaching team

At a Senate Banking Committee hearing on Wednesday, Fed Vice Chairman Barr said SVB had been repeatedly warned by regulators. He said the failure was a “textbook case” illustrating poor banking practices.

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Daly, an economist, took over as president in 2018 after more than 20 years at the San Francisco Fed. Critics have criticized his team for being overly enthusiastic about boosting the well-being of senior officials, according to the people, who asked not to be identified because it was inside information.

One day, about a year after he took office, he summoned executives from the supervisory department to a meeting. Immediately after the results of an internal survey on employee satisfaction came out, the supervisory department had the lowest level of satisfaction in the bank. Daly rebuked executives and told them to spend the weekend thinking about whether they wanted to continue working.

A spokeswoman for the San Francisco Fed said that then-president Daley believed that low morale led to poor coaching. He declined to speak further. He also declined requests for an interview with Governor Daly. A Federal Reserve official in Washington also declined to comment.

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Since then, the San Francisco Federal Reserve Bank’s banking supervision unit has experienced a series of staff changes. In 2021, the head of the department retired, but was replaced by a former head of the audit department, not from the department.