FDIC chair nominee Christy Goldsmith Romero said today that she is “very open” to a reproposal of the Basel III endgame capital requirements, and that the agency under her leadership will strive to follow congressional intent concerning a law requiring banking agencies to tailor their regulations to bank size.
Romero, who currently serves on the Commodity Futures Trading Commission, was nominated by President Biden in June to succeed current FDIC Chairman Martin Gruenberg, who plans to resign. She appeared before the Senate Banking Committee for her confirmation hearing, where she mostly fielded questions on improving workplace culture following a third-party investigation that found widespread sexual harassment and abuse at the FDIC. However, senators also probed Romero on proposed bank policy and her leadership should the agency face a future bank failure like that of Silicon Valley Bank.
Asked about possible changes to the proposed capital requirements, Romero said she is open to reproposing the rule to kick off another round of review and comment, but added that she had not seen any of the proposed changes. “I’m certainly inclined to have a proposal whenever there are this many comments [on the rule] and there are going to be broad material changes,” she said.
Romero was also asked about a recent Supreme Court ruling overturning the longstanding “Chevron deference,” which instructs courts to defer to a federal agency’s reasonable interpretation of an ambiguous statute. Specifically, she was asked how the ruling would affect the FDIC’s interpretation of the regulatory tailoring requirements in S.2155, which was enacted into law in 2018.
“I really believe we are limited as regulators to the laws that are before us and we should strive to look to congressional intent,” she said. “Everything I do now is to sort of say, ‘What is the authorization from Congress and how do we stick with it?’ S.2155 is the law of the land. I’m going to comply with it. I really believe in the sentiment behind it in terms of tailoring regulation.”
Romero also attributed SVB’s failure to a lack of risk management at the bank and a failure of risk supervision on the part of regulators. Questioned whether she viewed the SVB and Signature Bank failures as a possible contagion that threatened the banking system at the time they happened, she answered that customers need to be reassured that their money is safe at banks. “I do think we need to be looking deeply at this issue of bank runs and consumer confidence, particularly in modernized banking,” she said.
