Two collapsed US banks were exempt from financial stress tests last year

Two recently collapsed US banks were exempt last year from stress tests that examine how financial institutions would fare in tough economic times.

Silicon Valley Bank and Signature Bank failed over the weekend, raising questions as to why the US Federal Reserve could not see the risk beforehand.

The Fed introduced stress tests after the 2008 financial crisis. All banks with total consolidated assets of 100 billion dollars or more are subject to the tests.

A government official says the two banks each had more than 100 billion dollars in assets last December, but were not targeted for testing last year or this year.

Sources say this is because it would have taken at least two years to prepare for such tests.

Deposits in Silicon Valley Bank had more than tripled over a two-year period through last March, due to massive monetary easing.

The Fed says it will review its system of bank supervision and regulation by May 1.