Fed’s Barr to Congress: How should regulators adapt to new banking risks?
Silicon Valley Bank’s sudden demise rattled confidence in healthy banks and threatened the stability of the overall banking system. So the Federal Reserve needs to determine whether it can minimize this type of outcome in the future, and if so, how. That’s the message from Michael Barr, the Fed’s vice chairman of supervision, who lays out a series of questions for Congress to consider in exploring potential legislative action to change how banking is regulated.
The failure of Silicon Valley Bank was “a textbook case of mismanagement,” according to Michael Barr, vice chairman of supervision for the Federal Reserve.
Nonetheless, the failure raises questions about evolving risks in the banking industry and whether regulators can and should do more to intercede, Barr will say to Congress.
Barr is slated to testify before the Senate Banking Committee on Tuesday, March 28, but the Fed released his scripted remarks a day early. He is also scheduled to appear before the House Financial Services Committee on Wednesday.
Barr is in charge of the Fed investigation into how its staff handled Silicon Valley Bank prior to the closure. Its sudden demise rattled confidence in healthy banks and threatened the stability of the overall banking system.
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