The important thing for Americans to know following the failures of Silicon Valley Bank and Signature Bank is that the overall banking sector is resilient, well-capitalized and has solid liquidity, American Bankers Association President and CEO Rob Nichols said today during a wide-ranging interview for C-SPAN’s news program Washington Journal. “What happened at these two institutions is not symbolic or suggestive of a systemic challenge that the sector is facing,” he said.
Nichols, in response to questions from the host and viewers across the country, spelled out some of the differences between SVB and Signature from other banks. He noted the depth and diversity of the U.S. banking system, and the important role that banks of all sizes play in the economy. “We are the envy of the world with regard to our banking system,” Nichols said in describing the benefits that community, midsize, regional and large banks provide the economy. “Each serves a unique niche within the U.S. economy that is really important. That’s, in part, why we have the world’s largest and most dynamic and robust economy, because of the banking system.”
Nichols also noted that the Federal Reserve, FDIC and Government Accountability Office are reviewing whether regulators failed to spot warning signs in the leadup to the failure of SVB, or if new regulation may be necessary. “We think the Fed had the necessary tools to control what was happening at SVB,” he said about the latter. “I think we really need to get a sense of the facts first before we encourage a broader rule writing of the banking sector.”
He also cautioned against rushing to raise capital levels for the nation’s banks, emphasizing that it could be a misstep to do so. “We’re going into a period of potential economic uncertainty, and the idea of ratcheting up capital requirements in a way that could impede economic activity is something that should be considered very carefully,” Nichols said.
