McHenry, Hill Demand Details on Biden Administration’s Response to Recent Bank Failures
Washington,
March 23, 2023 -
The Chairman of the House Financial Services Committee, Patrick McHenry (NC-10), and the Vice Chairman of the House Financial Services Committee, French Hill (AR-02), sent letters to Federal Deposit Insurance Corporation (FDIC) Chair Martin Gruenberg and Treasury Secretary Janet Yellen. In the letters, McHenry and Hill demand detailed information regarding the Biden Administration’s response to recent bank failures, particularly regarding whether there was a viable private sector option for Silicon Valley Bank and Signature Bank.
Read the full letter to FDIC Chair Gruenberg here.
Read key excerpts from the letter to FDIC Chair Gruenberg below:
“We write regarding the failures of Silicon Valley Bank, Santa Clara, California and Signature Bank, New York, New York and their subsequent receiverships. Between March 10th and March 12th, 2023, SVB and Signature Bank were closed by their respective state-chartering authorities and placed into Federal Deposit Insurance Corporation (‘FDIC’) receivership. Since then, the FDIC, in coordination with the Board of Governors of the Federal Reserve Board (‘Federal Reserve Board’) and the Secretary of the U.S. Department of the Treasury (Treasury), have taken the extraordinary measure of invoking the system risk exception to the Federal Deposit Insurance Act’s least cost resolution mandate.
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“Given the unprecedented speed of the bank failures and subsequent effects on the U.S. financial system, it is critical that Congress understand the events leading up to and following the failures of both Silicon Valley Bank and Signature Bank. In particular, Congress must understand the FDIC’s role both as receiver for the failed banks and as the primary Federal banking agency for Signature Bank.”
Read the full letter to Treasury Secretary Yellen here.
Read key excerpts from the letter to Secretary Yellen below:
“I am in receipt of your letter dated March 12, 2023, notifying the House Committee on Financial Services of your decision to invoke the emergency systemic risk exception pursuant to section 13 of the Federal Deposit Insurance Act (FDI Act), as amended. As you note, the FDI Act requires the Federal Deposit Insurance Corporation (FDIC) to identify the least cost resolution of a failed bank for the Deposit Insurance Fund (DIF). Only when the least cost resolution ‘would have serious adverse effects on economic conditions or financial stability,’ may the Secretary of the Treasury in consultation with the President and on the recommendations of the FDIC Board of Directors and Federal Reserve Board (FRB) authorize the FDIC to take action to mitigate such effects.
“As part of its notification, section 13 requires the Treasury Secretary to include a description of the basis for making a systemic risk determination. Notwithstanding your March 12th letter, the basis for your determinations remains unclear.”
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