---
title: Three years after SVB, bank supervisors are re-examining how they watch risk
url: https://hangingcontext.com/stories/2026-10-16/bank-risk-supervision-rethink/
published: 2026-10-16T00:39:19Z
edition: 2026-10-16T00
newsroom: federal-government
beat: None
audience: banker
trust: confirmed
source_count: 4
cited_manifest_ids: ['1792033796975003287', '1792062026500193418', '1792079219106854147', '1792071156499724710']
---

# Three years after SVB, bank supervisors are re-examining how they watch risk

*A Federal Reserve speech calls for sharper, more accountable bank supervision. Trading assets at the largest banks have doubled since 2019. And researchers warn the energy lenders left behind by securitization are holding worse collateral.*

Confirmed · 4 sources · Federal Government · Published 2026-10-16 00:39 UTC

## Key facts

- The Federal Reserve is enhancing its supervisory decision-making framework to allocate responsibility, authority, and accountability more directly, after supervisors failed to act on SVB's vulnerabilities in time. [cites: 1792033796975003287]
- Trading assets at the largest U.S. banks neared $3.7 trillion in Q2 2026, roughly double the end-2019 level and about 20% of those banks' total assets; trading revenue hit $117 billion in 2025 versus $62 billion in 2022. [cites: 1792062026500193418]
- In November 2025, the Federal Reserve, FDIC, and OCC adopted a final rule modifying enhanced supplementary leverage ratio (eSLR) standards. [cites: 1792062026500193418]
- Energy producers have issued about $20 billion in PDP asset-backed securities since 2019, at 55-75% advance rates versus 40-50% for traditional reserve-based lending; the Dallas Fed warns traditional lenders face adverse selection as the lowest-risk collateral leaves. [cites: 1792079219106854147]
- ECB research finds three frictions jointly set repo haircuts, and that constrained dealers show higher repo-rate volatility and weaker pass-through of policy rate changes. [cites: 1792071156499724710]

## A speech about supervision

Bowman is pushing to modernize bank supervision, three years after the failure of Silicon Valley Bank. The Federal Reserve, the argument goes, is enhancing its supervisory decision-making framework so that responsibility, authority, and accountability land in clearer places. The premise is blunt: supervisors had information about SVB's major vulnerabilities many months before the bank failed and did not make appropriate use of it. [cites: 1792033796975003287]

The implication is structural. If supervisors had information about SVB's vulnerabilities many months before the failure and failed to act on it, the remedy is not more information but clearer lines of responsibility, authority, and accountability, which is what the framework change promises to allocate more directly. [cites: 1792033796975003287]

## The trading book keeps growing

Meanwhile the balance sheets under supervision have gotten much bigger. Trading assets on the books of the nation's largest banks neared $3.7 trillion in the second quarter of 2026, roughly double the level at the end of 2019 and about a fifth of those banks' total assets. Trading revenue has climbed with it, reaching $117 billion in 2025 after falling to $62 billion in 2022. [cites: 1792062026500193418]

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Regulation helped inflate the number: in November 2025 the Federal Reserve, the FDIC, and the OCC adopted a final rule modifying the enhanced supplementary leverage ratio standards. The implication is awkward sitting next to the supervision speech. The rulebook changed for the biggest balance sheets in the same period supervisors are being told to sharpen up. [cites: 1792062026500193418]

## The energy lenders left behind

A different corner of lending is watching its best collateral walk out the door. Energy producers are increasingly packaging proved-developed-producing reserves into asset-backed securities, with about $20 billion issued since 2019. The deals offer advance rates of 55 to 75 percent, well above the 40 to 50 percent typical of traditional reserve-based lending, and they typically require hedging on 75 to 85 percent of production. [cites: 1792079219106854147]

The catch, flagged by the Dallas Fed, is adverse selection: producers securitize their lowest-risk producing assets, leaving traditional lenders with borrowing bases tilted toward riskier reserves. The researchers' prescription is for banks to strengthen hedging requirements, step up oversight while fields are being developed, and recalibrate advance rates and pricing to reflect the thinner collateral left behind. [cites: 1792079219106854147]

The mechanics explain the appeal. PDP ABS deals isolate producing assets in bankruptcy-remote special-purpose entities, eliminating the semiannual borrowing-base redeterminations that make traditional reserve-based lending volatile. The Dallas Fed's research describes the structures as increasingly prevalent in the energy landscape. [cites: 1792079219106854147]

## The plumbing gets a paper

And the market plumbing has its own new research. An ECB working paper finds that haircuts in bilateral repo markets are set by three frictions working together: dealer balance-sheet constraints, collateral convenience yields, and the outside options available to clients. When dealers are constrained, repo-rate volatility rises and changes in the ECB's policy rate pass through more weakly. [cites: 1792071156499724710]

The paper's warning is aimed squarely at regulators: post-crisis bank regulation may carry unintended consequences for how repo markets function and how monetary policy transmits. Read together, the week's output suggests a consistent message across the Atlantic. Supervisors want sharper decision-making, trading books keep expanding under looser leverage rules, energy lenders are being picked apart by securitization, and the rules themselves keep generating side effects in the plumbing. [cites: 1792071156499724710]

## What is still unresolved

- No timeline has been published for implementing the Fed's new supervisory decision-making framework.
- Whether the combination of larger trading books and looser leverage-ratio standards is raising systemic risk, or simply reflecting market growth.
- How far the PDP asset-backed market grows, and whether traditional reserve-based lenders reprice or retreat.
- Whether ECB policymakers act on the repo-market findings or treat them as academic.

## Decision card

- **Useful for:** Bank risk and compliance teams; Regulatory policy watchers; Bank credit analysts
- **Not for:** Anyone looking for investment advice
- **Compare against:** 2023 SVB post-mortem coverage; Basel III implementation timelines

## Provenance ledger

| Manifest id | Title | Source | Claims used | Published |
|---|---|---|---|---|
| `1792033796975003287` | Bowman, Supervisory Modernization After Silicon Valley Bank | [fed-national-speeches](https://federalreserve.gov/newsevents/speech/bowman20261014a.htm) | 1792034131739200452, 1792034131736225831 | 10-15 00:00 |
| `1792062026500193418` | Banking Analytics: Largest Banks' Trading Assets Surge in Recent Quarters | [fed-stlouis-blog](https://stlouisfed.org/on-the-economy/2026/oct/banking-analytics-largest-banks-trading-assets-surge-recent-quarters) | 1792062315840164973, 1792062315845288620, 1792062315847439029, 1792062315851696989, 1792062315853496495, 1792062315861711519 | 10-15 00:00 |
| `1792079219106854147` | Reserve-based lenders must adapt risk framework as energy producers package best collateral in asset-backed securities | [fed-dallas-research](https://dallasfed.org/banking/pubs/dfb/2026/2610) | 1792079631057704981, 1792079631062379966, 1792079631079392749, 1792079631069568081, 1792079631054393251, 1792079631091801478, 1792079631059525974, 1792079631061909147 | 10-15 00:00 |
| `1792071156499724710` | Stop believing in haircuts - at least the way you think about them | [ecb-working-papers](https://ecb.europa.eu/pub/pdf/scpwps/ecb.wp3301~1585c96063.en.pdf) | 1792071602413585208, 1792071602428952443, 1792071602430994702 | 10-15 00:00 |

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Cited Manifest ids:

- `1792033796975003287`
- `1792062026500193418`
- `1792079219106854147`
- `1792071156499724710`

```sh
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done
```

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