Ted Cruz, Jim Jordan Write Scathing Letter To San Francisco Fed On SVB Collapse: Regional Central Banks 'Stonewalling Congressional Oversight'

U.S. Senate Commerce Committee Ranking Member Ted Cruz (R-Texas) and House Judiciary Chairman Jim Jordan (R-Ohio) sent a bicameral letter to Federal Reserve Bank of San Francisco President Mary Daly on Tuesday, demanding immediate answers on Silicon Valley Bank's collapse.

What Happened: "The San Francisco Fed is who had supervisory responsibility for Silicon Valley Bank. The duration risks on these bonds was evident on the face of it and yet the approach of the San Francisco Fed seems to be that oversight cannot be applied to it, that it does not have to respond to the American people, it does not have to respond to Congress,” Cruz told Bloomberg TV.

“And the consequence was billions of dollars that went up in smoke because the regulators failed to catch this and do their job," added Cruz.

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The letter by Cruz and Jordan criticized the San Francisco Fed while arguing that the regional central banks “have a yearslong pattern and practice of stonewalling Congressional oversight requests.”

"The SF Fed's repeated refusal to comply with such requests, in part, prompted a bipartisan group of Senators to introduce legislation that would require the Federal Reserve regional banks to respond to lawmakers and the public. That legislation is pending, but answers regarding SVB's collapse are needed immediately," the letter said.

"The need for transparency from the Federal Reserve is greater than ever," it added.

Bailout: Talking about the Joe Biden-administration's bailout of the customers at Silicon Valley Bank, Cruz told Bloomberg TV that many of “those customers were politically well-connected” and were political supporters of the President.

“I got to say that leaves a lot of Main Street sitting behind wondering, ‘What happens if I don’t have a lobbyist with stroke in this White House?"' he said.

Cruz also highlighted the need to have clear standards that are also transparent and expressed concerns about flight of capital from community and mid-sized banks to the giant banks.

"I think that is really harmful. One of the great strengths of our economy is the multitude of small community banks we have that financed small businesses, that financed entrepreneurs. If depositors say, ‘Well, I am safe if I am at a giant bank but at a smaller bank, I am not,' that really has a negative impact across the board," he said.

Cruz and Jordan are also seeking all documents and communications regarding examinations and enforcement actions concerning SVB since January 2020, according to the letter.

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