Federal Reserve Governor Michelle Bowman once again called for a “targeted” regulatory response to the recent bank failures, pushing back against broader reforms that “appear to advocate a shift away from tailoring and risk-based supervision.”
Sens. Thom Tillis (R-N.C.) and Jon Tester (D-Mont.) urged President Biden to appoint an independent investigator to further probe the recent bank failures.
Federal banking regulators testified before the House Financial Services Committee during the first of five congressional hearings this week on the recent bank failures, where they were pressed on why supervisors did not elevate concerns raised about Silicon Valley Bank ahead of its closure.
The unique nature and business models of the banks that recently failed do not justify imposing new, overly complex regulatory and supervisory expectations on a broad range of banks, Federal Reserve Governor Michelle Bowman said.
State and federal banking regulators did not take steps to ensure that Silicon Valley Bank more quickly address problems identified by supervisors before its collapse, the California Department of Financial Protection and Innovation said.
The Federal Open Market Committee announced it would raise the target range for the federal funds rate by 25 basis points to 5% to 5.25%.
First Republic Bank in San Francisco was closed May 1 by the California Department of Financial Protection and Innovation, which appointed the FDIC as receiver.
Federal Reserve supervisors did not fully appreciate the extent of the vulnerabilities as Silicon Valley Bank grew in size and complexity, and the bank experienced “a textbook case of mismanagement,” Federal Reserve Vice Chairman for Supervision Michael Barr said in his long-awaited report on the institution’s failure.
House Oversight and Accountability Committee leaders wrote to San Francisco Federal Reserve Bank President and CEO Mary Daly requesting documents and information related to the oversight of Silicon Valley Bank.
The U.S. banking system remains the deepest and most resilient in the world, ABA and 51 state bankers associations said in a letter to congressional leaders.