Good morning, CFOs. A Senate report finds KPMG ignored SVB’s flaws; the Fed lowers rates by a quarter-point; and StubHub’s stock declines in its market debut.

KPMG ignored several flaws at Silicon Valley Bank and two other banks before their collapse in 2023, signs of shortcomings in their auditing oversight, according to a report from Senate Democrats.

The Big Four accounting firm had yearslong awareness of problems at SVB, Signature Bank and First Republic Bank before they failed, but it provided clean audit reports for the regional banks, Democrats on a Senate Homeland Security and Governmental Affairs subcommittee said Wednesday. The banks were unprepared for higher interest rates, which weakened the value of their securities and loans and led depositors to seek higher rates.

The report “exposes KPMG’s willful blindness and stresses that significant reforms to the auditing industry are needed to promote transparency and better protect consumers,” said Sen. Richard Blumenthal (D., Conn.), ranking member of the U.S. Senate Permanent Subcommittee on Investigations.

A KPMG spokesman said the report is a “misguided and erroneous opinion” and omits critical context, adding that the firm stands by its audit opinions. KPMG previously told the subcommittee that it isn’t responsible for assessing a client’s “risky or even reckless business strategy.”

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The Federal Reserve approved a quarter-point interest rate cut Wednesday, the first in nine months, with officials judging that recent labor-market softness outweighed setbacks on inflation.

A narrow majority of officials penciled in at least two additional cuts this year, implying consecutive moves at the Fed’s two remaining meetings in October and December. The projections hint at a broader shift toward concern about cracks forming in the job market in an environment complicated by major policy shifts that have made the economy harder to read.

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• Retailers and manufacturers pulled back on orders after tariffs spurred a rush of cargo into the ports of Los Angeles and Long Beach.
• The Securities and Exchange Commission said it will no longer block companies from the public markets if they banned shareholders from filing class-action lawsuits, the Financial Times reported.

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The Wall Street Journal's CFO Journal offers corporate leaders and professionals CFO analysis, advice and commentary to make informed decisions. We cover topics including corporate tax, accounting, regulation, capital markets, management and strategy.

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