Watch out for banks but don't alarm anyone.
This is how the bank regulators seemed to see their role in the run-up to the banking crisis of last month, which was centered on the failure of Silicon Valley Bank of California and Signature Bank of New York.
Over the years, federal regulators who oversee Silicon Valley Bank have pointed out many of its flaws in a language that was heavily diluted by technical jargon. The regulators identified many problems, but they did not act quickly. The bank leaders were given long deadlines to fix the problems, and the overall safety and soundness rating was delivered at a slow pace. They also seemed reluctant to draw any conclusions regarding the accumulating issues.
In New York, supervisors who were in charge of overseeing Signature Bank's operations slowed down regulatory reports. They also failed to encourage the senior bank leaders to correct problems that they identified.
Takeaways from the reviews that were released by the Federal Reserve on Friday, the Federal Deposit Insurance Corp., and the U.S. Government Accountability Office.