The chair of the powerful Senate Banking Committee expects lawmakers and regulators to collaborate on changes to regulations and bank laws in the wake of the collapse of Silicon Valley Bank and Signature Bank of New York.
“Virtually everyone I talked to understands how quick actions by regulators are crucial to restoring any semblance of trust,” said Sen. Sherrod Brown, an Ohio Democrat. He added, however, that “it’s going to take a lot more than that” to restore public faith in the industry.
Brown also took aim at former Silicon Valley Bank executives, saying that “the more we learn about SVB, the worse the management of the bank looks.” Speaking at an American Bankers Association conference Wednesday, he argued that the executives’ ineptitude illustrates the need for stronger rules.
He predicted that regulators will look to reform oversight of banks by adjusting capital and liquidity standards, saying that “most of the action” will be handled by regulators adjusting their approach.
“We don’t rule out doing some things legislatively,” he added, noting that there could be bipartisan support for new laws to reform the system of deposit insurance administered by the Federal Deposit Insurance Corp.
Some experts are arguing for raising or eliminating the $250,000 cap on deposit insurance per bank account to prevent the sort of run on accounts that led to SVB’s collapse.
See also: Unlimited deposit insurance: A radical idea that’s gaining steam in Congress
Brown will convene a hearing next Tuesday with top financial regulators to examine the failures of SVB and Signature Bank, featuring FDIC Chair Martin Gruenberg, Federal Reserve Vice Chair of Supervision Michael Barr and Treasury Under Secretary for Domestic Finance Nellie Liang.
“The American public deserves answers,” Brown said in a statement. “We need to begin these hearings to understand these bank failures and next steps to make sure this never happens again.”
