Acting Comptroller of the Currency Michael Hsu today suggested that banking agencies may want to consider creating a heightened regulatory and supervisory framework for “systemically important” domestic banks like that in place for global systemically important banks, although he provided no details on what that framework would entail.
In a speech on banking supervision, Hsu noted that the U.S. maintains high regulatory and supervisory standards for GSIBs. However, he pointed to last year’s failures of Silicon Valley Bank and two other domestic banks as an example of stress on the financial system that can result from the failures of non-GSIB banks. Banking agencies must ensure that supervision and regulation of non-GSIB large banks “are not under-calibrated,” Hsu said, although he provided no examples of policy changes that could be enacted.
“Given last spring’s banking turmoil and the projected growth of large banks, the time may be ripe for the U.S. banking agencies to consider a framework for formally identifying domestic systemically important banks,” Hsu said. “Doing so could provide helpful transparency and rigor for those banks that need it as it would clarify the stakes involved of weakly supervising and regulating such institutions.”
