Lawmakers in the US are divided over what legislative action to take after two banks collapsed last week.
President Joe Biden called for new banking regulations to prevent future failures, but some congressional leaders believe the laws were already sufficient.
The House Financial Services Committee has announced its first hearing on 29 March. On the Senate side, chairman of the Senate Banking, Housing, and Urban Affairs Committee, Sherrod Brown, said that his committee would also hold a hearing to assess what went wrong, with the first hearing likely to focus on witnesses responsible for regulating the failed banks.
Democrats are rallying around two legislative proposals: the first, from Senator Elizabeth Warren and Representative Katie Porter, would repeal the 2018 rollback of certain aspects of the Dodd-Frank Act that were enacted after the 2008 financial crisis. The second, known as the Public Banking Act, would establish a system of public banks throughout the US.
Republicans have countered that the Dodd-Frank Act was already too burdensome and argue that banks should not have been allowed to offer customers uninsured deposits. Republicans have also asked regulators why they did not act on reports of a liquidity risk at Silicon Valley Bank and why the FDIC failed to auction off the bank’s remaining parts last weekend.
Senator Cynthia Lummis has expressed concerns about whether the collapse of Signature Bank will lead to further crackdowns on cryptocurrency, while Senator John Kennedy wants to know why regulators failed to spot potential problems with Silicon Valley Bank despite warnings from private stock analysts.
Primary Source: Associated Press
Factual Confidence: High (Multiple Sources)