The Chair of the Senate Banking Committee expects lawmakers and regulators to collaborate on changes to regulations and bank laws in the wake of the collapse of Silicon Valley Bank and Signature Bank of New York.
"Practicely everyone I talked to understands how quick action by regulators are crucial to restoring any semblance of trust," said Sen. Sherrod Brown, an Ohio Democrat. He added that it is going to take a lot more than that to restore public faith in the industry.
Brown also took aim at former Silicon Valley Bank executives, saying that the more we learn about SVB, the worse the management of the bank looks. He stated at the American Bankers Association conference Wednesday that executives ineptitude illustrate the need for stronger rules. He predicted that regulators will look to reform oversight of banks by adjusting capital and liquidity standards, and that most of the action will be handled by regulators adjusting their approach. He said that we don't rule out doing some things legislatively, but he added that there could be bipartisan support for new laws to reform the system of deposit insurance administered by the Federal Deposit Insurance Corp. Some experts are advocating for a $250,000 cap on deposit insurance per bank account to be removed to prevent the kind of run on accounts that led to SVB's collapse. A radical idea that is gaining steam in Congress Brown will hold a hearing next Tuesday with top financial regulators to examine the failures of SVB and Signature Bank, featuring FDIC Chair Martin Gruenberg, Federal Reserve Vice Chair of Supervision Michael Barr and Treasury Under Secretary for Domestic Finance Nellie Liang. Brown said that the American public deserves answers. We need to start these hearings in order to understand these bank failures and next steps to make sure this never happens again.