Senate Democrats seek proposals for regulatory changes following recent bank closures

Senate Banking Committee Democrats today asked Treasury Secretary Janet Yellen for an assessment of possible regulatory and legislative changes needed to strengthen the financial system following the failures of Silicon Valley Bank and Signature Bank. The letter—which was also signed by Sen. Krysten Sinema (I-Ariz.)—urged banking regulators to “identify risks and vulnerabilities brought to light during this crisis and provide specific recommendations on regulation, legislation or other actions necessary to address these threats.” They asked for a report within 60 days.

Areas to assess include quantifiable risks within prudential regulation, such as liquidity and interest rate risk management, and concentrations in asset classes like commercial real estate and long-duration bonds, according to the letter. The senators also asked for assessments on qualitative risks such as social media and algorithmic marketing; the scope of federal liquidity backstops designed to reduce the risk of contagion; the patchwork of state and federal supervision; and the ability of regulators to hold executives accountable for mismanagement.