Source: United States Senator for Maryland Chris Van Hollen
Today, U.S. Senator Chris Van Hollen (D-Md.) joined Senator Sherrod Brown (D-Ohio) in sending a letter to Treasury Secretary Janet Yellen, urging the Financial Stability Oversight Council (FSOC) and its member agencies to review how our financial system is serving consumers, small businesses, and small banks, and to recommend ways we can strengthen our financial system against threats.
“Banking regulators are reviewing what went wrong at the failed institutions, but reflection must not stop there,” the Senators wrote. “Under the broad authorities granted to the Council, we urge you to identify risks and vulnerabilities brought to light during this crisis and provide specific recommendations on regulation, legislation, or other actions necessary to address these threats.”
In addition to Senator Van Hollen, Senator Brown was joined by Senators Jack Reed (D-R.I.), Bob Menendez (D-N.J.), Jon Tester (D-Mont.), Mark Warner (D-Va.), Elizabeth Warren (D-Mass.), Catherine Cortez Masto (D-Nev.), Tina Smith (D-Minn.), Kyrsten Sinema (I-Ariz.), Raphael Warnock (D-Ga.), and John Fetterman (D-Pa.).
A copy of the letter is available here and below:
Dear Secretary Yellen:
To better promote market discipline and strengthen financial stability, the Financial Stability Oversight Council (FSOC) and its member agencies must review the full framework of regulations protecting depositors, consumers, and the U.S. financial system. Recent events serve as a wake-up call to reinforce our financial system to protect consumers and small businesses from systemic bank failures while preserving small banks and credit unions on Main Street.
The U.S. Department of the Treasury, the Federal Reserve, and the Federal Deposit Insurance Corporation came together under the systemic risk exception to address the recent bank failures, promote consumer confidence, and protect the financial system. These actions ensured workers could receive their paychecks and enabled small businesses to survive while providing depository institutions with the certainty arising from enhanced liquidity options.
Banking regulators are reviewing what went wrong at the failed institutions, but reflection must not stop there. Under the broad authorities granted to the Council, we urge you to identify risks and vulnerabilities brought to light during this crisis and provide specific recommendations on regulation, legislation, or other actions necessary to address these threats. Areas to assess include:
- Traditional, quantifiable risks within prudential regulation, such as liquidity and interest rate risk management of less durable funding sources like non-core or uninsured deposits, and concentrations in asset classes like commercial real estate & long duration bonds;
- Qualitative risks, such as the influence of social media and algorithmic marketing on bank safety and soundness and consumer protection, and the related effect of financial stability;
- Emerging risks faced by the financial sector, such as market volatility caused by geopolitical, economic, and financial events;
- The scope of federal liquidity backstops available to banks and credit unions intended to reduce the risk of contagion and promote financial stability, such as access to the Federal Reserve’s discount window and Federal Home Loan Banks;
- The patchwork of state and federal supervision and examination of covered institutions, insufficient communication among regulators, and regulator’s ability to effectively enforce the law; and
- The ability of regulators to hold executives accountable for their mismanagement of covered financial institutions.
Please provide your assessment of these risks and recommendations within sixty (60) days. We must take action now so that Americans can continue to be confident in our financial system and their financial institution of choice.
Thank you for your prompt attention to this matter.