SVB's collapse raises questions about equity compensation and regulatory oversight.

The failure of Silicon Valley Bank (SVB) has raised questions about the effectiveness of bank supervision. Regulators had identified problems with SVB's risk management and exposure to rising interest rates and deposit flight, but were unable to force changes until it was too late. The failure of SVB and Signature Bank prompted an extraordinary government response to back the entire banking system. Regulators have no good answers for why all the evidence of excessive risk remained confined to confidential reports among bank supervisors, their bosses, and SVB management. The real work of bank supervision may take place in the shadows, but it doesn't work if policymakers don't act on what those supervisors learn.