(Bloomberg) -- California’s financial regulator said it will more closely scrutinize banks and increase staffing following the collapse of SVB Financial Group’s Silicon Valley Bank.

The Department of Financial Protection and Innovation said in a report Monday that it plans to overhaul its process for escalating concerns among its employees and add to staff overseeing banks with assets exceeding $50 billion.

Regulators will work more closely with their federal counterparts on implementing “stronger and more effective systems to remediate deficiencies promptly.” In addition, they plan to review staffing policies, focus more on the level of banks’ uninsured deposits and examine the risk posed by emerging banking technology and social media.

The report comes after asset-liability mismatches sparked bank runs that toppled four US lenders and raised concerns about further contagion in the industry. Of the four banks to collapse since March, three — Silvergate Capital Corp., Silicon Valley Bank and First Republic Bank — were in California. 

The Federal Reserve Board in April released a report on its supervision of Silicon Valley Bank, as its primary federal regulator, while the Federal Deposit Insurance Corp. and the New York Department of Financial Services put out reports on New York-based Signature Bank. The agencies cited a number of issues, including staffing shortages that stretched their resources thin as well as slow responses on the part of the banks under their supervision.

Staffing Problems

The DFPI echoed those concerns.

The two staff members dedicated to SVB repeatedly expressed concerns about insufficient manpower in 2021 and 2022. In August 2022, the dedicated examiner conveyed an “inability to review the materials” due to the lack of personnel, according to the report. The agency initially denied a request for more staff in 2021 but eventually agreed to increase staffing in 2022. However, the implementation was delayed due to “competing staff demands,” turnover and employee development, according to the report.

Prior to the collapse of SVB, the agency planned to significantly enhance oversight in 2023, aiming to reach a staff capacity of 6,000 hours, which is roughly equivalent to three full-time employees.

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