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McHenry at Hearing on Bank Failures: We Need Competent Financial Supervisors. But Congress Can’t Legislate Competence.

Washington, March 29, 2023 -

Today, the House Financial Services Committee, led by Chairman Patrick McHenry (NC-10), is holding a hearing entitled, “The Federal Regulators’ Response to Recent Bank Failures.” Committee Republicans are committed to getting the facts surrounding recent bank failures to assess federal regulators’ response and deliver transparency for the American people.


Watch Chairman McHenry’s opening remarks here.


Read Chairman McHenry’s opening remarks as prepared for delivery:    


“Today, let’s put aside the pre-baked narrative that’s dominated the political discourse. 


“We are here because the American people deserve answers.


“Before we draw conclusions on regulations or changes to law, we need to establish the related facts. 


“In the runup to its failure, Silicon Valley Bank experienced rapid growth, relying on an undiversified deposit base and investments made risky by a high inflation environment. 


“We know the bank was mismanaged, that much is clear. 


“Now we need insight into the decisions and decision-making process of financial regulators related to the second and third largest U.S. banks failures. 


“We need insight into those key days in March, when an ‘idiosyncratic bank’ became a systemic risk, spawning a large-scale financial intervention that’s still ongoing.


“Vice Chair for Supervision Barr, you have been on the job a little less than a year. 


“However, you have made time to start a review of climate risks in banking and a review of capital standards for larger banks with no mention of changes to bank supervision, or liquidity provisions – two matters at issue with this bank failure. 


“In fact, I’ve never heard you say to Congress that you didn’t have the tools to do your job. 


“In fairness, neither Dodd-Frank, nor the technical corrections law, known as S. 2155, dealt with the issues presented in March—a digital bank run, the speed and volume of which had never been seen before. 


“This Committee would like to understand your thinking in the key hours of that first week in March. 


“Was there adequate planning for a large-scale bank run? Did the chief supervisor follow the playbook to ensure the bank did not fail? How did the chief supervisor and examiners miss the hole in the bank’s balance sheet? 


“Additionally, the Committee has no insight into the decision-making or the actions by the FDIC Chair on Friday the 10th through that Sunday evening when the systemic risk exception was announced. 


“Again, did the FDIC Chair use all the tools at his disposal to resolve the banks that weekend? 


“Was there a viable private sector solution?


“There are reports that multiple banks were interested and ran the traps internally to purchase SVB that weekend. You confirmed that yesterday, Chairman Gruenberg. 


“But as we all know, SVB was not purchased until late Sunday, March 26th, at an estimated $20 billion in losses to the Deposit Insurance Fund. 


“Why wasn’t a potential buyer accepted sooner?


“Was there an ideological lens that prevented the FDIC from pursuing a private sector solution that could have staved off the uncertainty of the last two weeks? 


“We know on Sunday, March 12th, another bank is shuttered and placed into FDIC receivership and together this is deemed a ‘systemic risk’ event. 


“That evening the Financial Stability Oversight Council meets in executive session. No meeting minutes, no transparency, just an announcement after the fact.


“Congress needs visibility into how and why this determination was made by the FDIC, the Fed, the Treasury Secretary and FSOC Chair, and the President. 


“I’ll finish with this, we need competent financial supervisors. But Congress can’t legislate competence.


“Today, this Committee wants to understand your thinking and decision making in a key moment of stress in our banking system.”



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