The Federal Reserve performed a post-mortem on last month’s spectacular, sudden failure of Silicon Valley Bank, and blamed terrible decisions by bank management, but also themselves and the FDIC for lax regulation.

When the go-to lender for startups Silicon Valley Bank suddenly collapsed over the course of one weekend in March, it was the second largest bank failure in U.S. history. The bank had held $211 billion in assets, a meteoric growth from having had just $71 billion in assets in 2019. But the bank was put into receivership with the US Federal Deposit Insurance Corporation (FDIC) on March 10 after a run on the bank where panicked depositors took tens of millions of dollars out in one day.

Lawmakers on both sides of the aisle have been quick to blame regulators at the FDIC and Federal Reserve for not being on top of the bank’s deteriorating financial condition as tech stocks tanked in 2022. "By all accounts, our regulators appear to have been asleep at the wheel," said Senate Banking Committee Republican ranking member Tim Scott (R-SC) according to Yahoo Finance. Meanwhile, liberal senator Elizabeth Warren is also quoted by Yahoo Finance as saying, “more and more lawmakers are troubled by the Fed's key role in the recent bank failures.”

That Yahoo Finance report covers the Federal Reserve’s own autopsy on why Silicon Valley Bank failed, and they do blame themselves for not regulating proactively enough, but also allowing looser regulations on mid-size regional banks. The federal analysis also blames the bank’s leadership and management for a series of disastrously short-sighted decisions.

"The Federal Reserve did not appreciate the seriousness of critical deficiencies in the firm’s governance, liquidity, and interest rate risk management. These judgments meant that Silicon Valley Bank remained well-rated, even as conditions deteriorated and significant risk to the firm’s safety and soundness emerged," the report said, according to the Associated Press.

In the self-blame department, the Federal Reserve admits it "failed to take enough forceful action" as the bank’s condition worsened. But they also point out that a series of 2018 Trump era regulatory rollbacks, whose aftermath "demonstrates that there are weaknesses in regulation and supervision that must be addressed."

The Fed's report suggests that the FDIC continued to give Silicon Valley Bank a "satisfactory" supervisory rating every year from 2017 through 2021, "despite repeated observations of weakness in risk management."

But the Fed also blamed leadership at the bank itself, saying their “core risk-management capacity failed to keep up with rapid asset growth, which led to steady deterioration of its financial condition in 2022 and into March 2023.”

According to Axios, the Fed is considering stricter banking regulations in the wake of Silicon Valley Bank’s collapse, and the situation with a few other regional banks.

The reports also addressed New York-based Signature Bank, whose federal seizure happened two days after Silicon Valley Bank was seized, and the Fed admitted that while "poor management" was the  "root cause" of that bank’s failure, they added that the FDIC "could have escalated supervisory actions sooner."

Closer to home, Yahoo Finance also reports that beleaguered SF-based First Republic Bank, which received a $30 billion infusion yet continues to melt down, could be headed for a federal takeover as well if another private bailout cannot be arranged.

Related: Report: Ron Conway Was Among Venture Capitalists Begging For Silicon Valley Bank Bailout [SFist]

Image: SANTA CLARA, CALIFORNIA - MARCH 13: A security guard at Silicon Valley Bank monitors a line of people outside the office on March 13, 2023 in Santa Clara, California. Days after Silicon Valley Bank collapsed, customers are lining up to try and retrieve their funds from the failed bank. The Silicon Valley Bank failure is the second largest in U.S. history. (Photo by Justin Sullivan/Getty Images)

Sad news for anyone who has ever felt the sting of an overdraft fee from the nation's largest bank: a federal appeals court in San Francisco declared yesterday that Wells Fargo Bank does not, in fact, owe California debit card holders some $203 million in restitution for its shady overdraft practices.

The class action lawsuit, which has been going on since 2007, alleged that Wells Fargo was using a shady method of processing debit purchases to a customer's checking account. Between 2001 and 2010, Bay City News reports, the bank would process the most expensive charges made in a day first before working through the lower charges. The end result is your checking account gets depleted faster and you're hit with a $35 fee for almost every charge.

To wit: if that expensive brunch you treated yourself to one Sunday morning was a little too much for your current checking account balance, you'd be hit with a painful $35 overdraft fee for that transaction. When you sobered up later, you might find out you were also hit with an overdraft charge for the $4 coffee you bought on your way to the restaurant and the $3 you spent an Walgreens on a travel size thing of Advil.

The practice was deemed misleading because the bank had implied that debit purchases were processed immediately and in chronological order. If an account didn't contain the necessary funds, customers were told, then the purchase wouldn't be approved in the first place.

At $35 a pop, Wells Fargo made $1.4 billion in overdraft fees between 2005 and 2007 alone. In 2010 a judge put a stop to the practice, calling it a "trap" that the bank exploited "with a vengeance, racking up hundreds of millions off the backs of the working poor, students and others without the luxury of ample bank balances."

At the time, the bank was ordered to repay $203 million in restitution, but in yesterday's decision a three-judge panel ruled that the federal law permitted the high-to-low processing procedure and overturned the monetary charge against Wells Fargo. The 9th Circuit Court did, however, agree with the earlier ruling that the bank had been misleading customers.

Since 2010, the bank has been processing debit card transactions in chronological order or from lowest to highest. Legally, the bank could return to the shady high-to-low processing practice (which would be disappointing), but according to a spokesperson for the bank, which is worth some $1.4 trillion, they have no intention to do so.

[BCN/Appeal]

Local rapscallions from the Rainforest Action Network (RAN) turned Bank of America ATMs into temporary political machines of activism overnight. Using non-adhesive stickers designed to look like BoA's ATM screens. In lieu of offering customers checking, savings, deposit, or withdraw options, the new menus "offered a list of everything BoA customers' money is being used for, including investment in coal-fired power plants, foreclosure on Americans' homes, bankrolling of climate change, and paying for fat executive bonuses."

Pretty sneaky, sis. RAN managed to hit 85 Bank of America ATMs in San Francisco last night. Here's a map of all the ATMs.

It's all part of RAN's new Tumblr, BankruptingAmerica.tumblr.com, which, it seems, will "track all the ways BoA is bankrupting America, hence the name." If you want to leave Bank of America — which is your call; we don't bank with them, so we don't care one way or another — SFist conducted a poll in November 2011 to see which credit union readers preferred. Interested in switching? Take a look.

In light of the historic protests currently taking place over on Wall Street, along with the trend of banks -- most notably Bank of America -- beginning to charge monthly fees for debit card use, SFist decided to make what little money we have talk by becoming a local credit union customer yesterday.

While shopping around last night, we encountered an impressive roster of potential credit unions. SF Fire Credit Union is by far the most popular one out there, and Redwood seems to have a lot of loyal customers as well. But Provident is the contender we chose, not only for its ease of use -- we signed up and immediately opened an account online, on a Sunday, but for the fact that instead of finding every way imaginable to take our hard-earned pennies, Provident will be adding 2.26% interest to them. (Provided that we actually keep any money in there.) Unheard of!

We're curious which credit unions SFist readers belong to. Fill out our handy poll! If we missed one on the list, let us know in the comments.

According to the Wall Street Journal, Wells Fargo has been ordered "pay more than $200 million to compensate customers who the judge said were improperly charged millions in overdraft fees." Today, Judge William Alsup of the U.S. District Court of Northern California, ruled that "the San Francisco bank improperly generated excessive overdraft fees for customers by posting transactions in an order that would generate more fees." (The banking industry culls in a whopping $40 billion each year in overdraft fees.) Wells Fargo plans on appealing the ruling. (Pro tip: Credit unions won't nickle and dime you nearly as much, nor make you wallow through as much red tape.)