House Financial Services Committee drafts legislation to increase credit union and bank oversight following bank failures
Following the fall of Silicon Valley Bank, Signature Bank, and the more recent First Republic Bank, many feared that these three failures signaled an impending crash reminiscent of 2008. Government entities and financial institutions alike were eager to keep the trend from continuing and prevent any further failures.
In the wake of these failures, the Federal Reserve issued a 114-page report on the Silicon Valley collapse, in which it claimed a portion of the blame, citing it had taken too long to identify the issues at Silicon Valley and even longer to act on them. Furthermore, it noted that as a result of a change in 2019, all but the largest banks were exempt from strict oversight, which had aided in the seemingly sudden failure.
However, the report also made it clear the Federal Reserve and fellow government entities would not allow this mistake to happen again.
Michael Barr, who led the review and serves as the federal vice chair for supervision noted, “Following Silicon Valley Bank’s failure, we must strengthen the Federal Reserve’s supervision and regulation, based on what we have learned.”
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