Source: United States Senator for New Jersey Bob Menendez
WASHINGTON, D.C. – U.S. Senator Bob Menendez (D-N.J.), a senior member of the Senate Banking, Housing, and Urban Affairs Committee, today questioned the Vice Chair for Supervision of the Federal Reserve System, Michael Barr, during a banking hearing on the recent bank failures and asked if the Silicon Valley Bank situation posed “systemic risk” to the economy.
“If any single bank’s failure can cause contagion that threatens the system, then it seems that the bank should be considered systemically important. You all need to have an obligation to be clear with us and with the American people when you took extraordinary steps to protect uninsured depositors that could very well lead to increased fees charged to banks and ultimately to consumers,” said Sen. Menendez. “I think we need to be clear about what is a systematic risk, and so I’m looking for a more crystalized version of that. I was here in 2008 and I don’t want to live through it again.”
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Sen. Menendez also asked Vice Chairman Barr if he agreed with President Biden’s statement from two weeks ago that Congress should strengthen rules for banks to make it less likely that we will see another failure similar to that of Silicon Valley Bank. The Vice Chairman expressed his commitment to strengthening capital and liquidity rules as part of the Basel III reforms as well as the holistic review of capital.
Sen. Menendez called attention to the letter sent this morning to Chairman Powell with Sens. Rounds and other members of the Committee asking him to explain whether the Fed applied enhanced supervision or prudential standards to Silicon Valley Bank or any similar-sized banks using the Fed’s existing authority. Sen. Menendez asked Vice Chairman Barr if he agreed with Chairman Powell’s statement last week that it is “clear that we do need to strengthen supervision and regulation,” and the Vice Chairman confirmed his agreement with the statement.
Two weeks ago, Sen. Menendez asked Secretary Yellen during a budget hearing on the recent bank failures about whether Silicon Valley Bank’s failure posed systemic risk to the entire financial system.
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