“There will be legislation,” Rep. Maxine Waters says after the recent bank failures.
Department will all testify before the Senate Banking Committee at a hearing on the recent bank failures starting at 10 a.m.
But according to Barr, regulators were more afraid that if they did not backstop deposits, what started as a contained shock could explode into a full-blown financial crisis. "If it's the regulator's fault It better be fixed," the Montana Democrat told Fed Vice Chair Barr. "If it's a regulation fault, it better be fixed."
U.S. Senator Elizabeth Warren speaks to Federal Deposit Insurance Corporation Chairman Martin J. Gruenberg before a Senate Banking, Housing and Urban Affairs Committee hearing on "Recent Bank Failures and the Federal Regulatory Response" on Capitol Hill in Washington, March 28, 2023.Democratic Sen. Elizabeth Warren pressed all three regulators about their views of increased banking rules, and Barr, Gruenberg and Liang all said they supported stronger banking rules.
"The Federal Reserve is undergoing an investigation to determine whether the Federal Reserve actually failed in this instance," Cortez-Masto said to Barr. "Is the Federal Reserve the appropriate body to conduct this investigation, or should we have an independent investigation?" Barr said the interest rate and liquidity risks were noted by a supervisor for the firm in November 2021, and added that SVB received a "3" rating on the Campbell scale, which indicates it was not well-managed.
"The FDIC, for every failed institution, is required to undertake an investigation of the conduct of members of the board, management of the institution as well as professional service providers and other institution affiliated parties. We've already done that investigation," Gruenberg said. "We are analyzing what recent events have taught us about banking, customer behavior, social media, concentrated and novel business models, rapid growth, deposit runs, interest rate risk, and other factors... And for how we think about financial stability."
Democratic lawmakers have placed an ample amount of blame for the largest bank failure since the 2008 financial crisis on banking executives, but federal financial regulators are also in their crosshairs.
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