Banks with bad capital planning, risk management and governance could also face “additional capital or liquidity beyond regulatory requirements,” the report said, suggesting that “limits on capital distributions or incentive compensation could be appropriate and effective in some cases.”
And Mr. Barr’s overview suggested that a broader set of banks should take into account gains or losses on their security holdings when it comes to their capital — money that can help a bank get through a time of crisis. That would be a major departure from how the rules are currently set, and Mr. Barr underlined that changing such standards would require a rule-making process that would take time.
“I agree with and support” the “recommendations to address our rules and supervisory practices, and I am confident they will lead to a stronger and more resilient banking system,” Jerome H. Powell, the Fed chair, said in a release accompanying Mr. Barr’s report.
The report stopped short of overt finger-pointing. It did not name or implicate specific individuals who had failed to properly account for risks in the case of Silicon Valley Bank, instead focusing on weaknesses in the overall system of regulation and supervision.
And some outside the Fed have suggested that the failures of oversight at the bank need to be reviewed by an independent body, because Mr. Barr has to continue working with his colleagues at the central bank and might be hesitant to criticize them.
“We need someone with some independence to dig in,” Jeff Hauser, director of the Revolving Door Project, said ahead of the release.
Mr. Barr suggested that he would be open to such a follow-up.
“We welcome external reviews of S.V.B.’s failure, as well as congressional oversight, and we intend to take these into account as we make changes to our framework of bank supervision and regulation,” Mr. Barr said in his statement.