Rep. Waters: ‘Deep dive’ needed to explore causes of banks’ collapse

House Financial Services Committee Ranking Member Maxine Waters (D-Calif.) shared her priorities for the committee’s oversight of the banking sector—broadly and in light of recent bank instability—during tday’s final day of the American Bankers Association Washington Summit.

Saying she was “most disturbed” with reports of the role bank executives might have played in the events leading to the failures, Waters is working on legislation to strengthen regulators’ authority to hold executives accountable for “any unlawful behavior.” She also wants to finalize rules under Section 956 of Dodd Frank, which would reform incentive-based compensation for executives. In a series of hearings next week with officials from the Treasury, the Fed and the Federal Trade Commission, she plans to explore ways to “quickly strengthen our laws to ensure this does not happen again,” including reforms to strengthen deposit insurance and enhanced prudential standards “in an appropriate way.”

A “deep dive” will be required, she said, looking into the different factors and components that comprise a bank’s business, citing SVB’s ties to tech companies and startups, and that 94% of the bank’s deposits were uninsured. There were “missed opportunities,” Waters said to “see what was happening … with [SVB’s] balance sheet” and to “correct things” before the point of collapse. “I believe we can work this out,” she added. “We can ensure that banks can operate in fashions that make good sense for them, but at the same time, always think about the important role that they play in our society, in our economy, and be poised to avoid collapse and failure.”

Waters also said she is focused diversity, equity and inclusion and strengthening the Community Reinvestment Act. “I’m committed to finding ways to continue [DEI] work in this Congress,” she said, including working to support minority depository institutions and community development financial institutions. “I think we can all agree that stronger CRA rules can expand lending to underserved communities and ensure all financial service providers are prioritizing service to low- to moderate-income borrowers.”