In the matter of the Silicon Valley Bank and Signature Bank failures, lawmakers must first gather the facts and determine what allowed both to occur rather than instantly pushing for new regulation, House Financial Services Committee Chairman Patrick McHenry (R-N.C.) said today at the American Bankers Association Washington Summit. McHenry, along with Ranking Member Maxine Waters (D-Calif.), recently announced the committee would soon hold the first of multiple hearings on the bank failures and subsequent economic turmoil. In his remarks, the chairman chided lawmakers who he believed were too quick to call for more regulation.
“Too often as legislators, we walk around and assume the answer is legislation,” McHenry said. “I think it is too early to tell if new legislation is necessary. … Some policymakers on both sides of the aisle are already jumping to the conclusion with incomplete information.”
There are key questions about the bank failures that must be answered, McHenry said. Did regulators miss red flags that would have alerted them to problems at both institutions? Were the banks’ management teams deficient? Is new regulation needed or did regulators fail to use the tools already available to them? “It’s important to note that we can’t legislate competence,” he said. “We give power to regulators and supervisors, they need to be competent. Management of institutions need to be competent. Boards of directors need to be competent…. We need to have competent people at the helm.”
