Janet Yellen’s Blame Game Is a Failure of Leadership

Thank you for calling out Treasury Secretary Janet Yellen’s cheap, political attempt to blame the Trump administration’s Financial Stability Oversight Council staff for the major lapses of Federal Reserve leadership in connection with the failure of Silicon Valley Bank (“Yellen Blames Everybody Else,” Review & Outlook, April 3). This bank failed because of an interest-rate duration mismatch between assets and liabilities during a period of rising interest rates that occurred entirely within the Biden administration’s term. This is a basic risk endemic to all banks. It is covered by multiple pages in the Fed’s bank examiners’ manual.

To the credit of the Fed’s bank examiners, based on press accounts, they correctly identified this risk. But San Francisco and Washington Fed leadership and California bank regulators inexplicably failed to take any action. If one is looking for a political explanation here, could this failure have resulted from a hesitancy to criticize a major funding source for Silicon Valley—the pocketbook for contributions to California’s Democratic Party? I hope the congressional investigations of SVB’s failure will shed light on any possible improper political influence.