The Washington Post: The Biden administration seeks to impose new banking rules after the collapse of Silicon Valley

The Washington Post revealed that the White House is preparing to call on federal banking regulators to impose new rules on medium-sized banks, prompted by the Silicon Valley bank collapse earlier this month, and the consequent major crisis of confidence in the banking sector. And the newspaper stated, quoting what it described as people familiar with the internal discussions, that lawmakers will, in the meantime, continue to press for answers about how the financial system has become so vulnerable in this way to the failures of the banks / Silicon Valley / and / Signature /. Senior officials of the Federal Reserve (the US central bank), the Treasury Department and the Federal Deposit Insurance Corporation testified before the US House Financial Services Committee, yesterday, Wednesday, where the members of the committee, the regulators, were questioned about their knowledge of the operation of the Silicon Valley bank. / Before its collapse on March 10, as well as about the responsibility of those responsible for this collapse. Michael Barr, the Fed’s vice chair for banking supervision, which is running an internal investigation, said: "I think when there is a bank collapse like this, the management of the bank has clearly failed, as well as the supervisors and the organizational structure .. We look at all this". According to the newspaper, President Biden is expected to seek to impose stricter regulations as part of his response plan to this crisis, which prompted his administration to support billions of dollars in uninsured deposits, due to exceeding the maximum limit of $ 250,000 for federal protection. The new regulatory measures will require implementation separately by the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency. Biden’s aides will develop the appropriate and necessary plan to prevent similar banking emergencies and similar federal interventions in the future, according to the Washington Post. However, the exact details of the White House’s recommendations are not yet clear, but it will try to re-establish the rules for banks with $100 billion to $250 billion in assets that were deregulated by Congress and the Federal Reserve during the previous administration of President Donald Trump. . Measures discussed by White House aides include imposing higher capital requirements on banks – meaning they would need to have a larger share of safe assets than their riskier loans, which would require them to have larger stocks of cash immediately available – and asking them to formulate plans for solutions. organization in the event of a crisis. It will also require banks to do more "endurance tests" repeated by federal regulators, who are evaluating their financial health. The related discussions are still in flux and may change before the White House finalizes its new plans. The Federal Reserve and the Federal Deposit Insurance Corporation are also investigating the March financial panic, and are expected to announce their own recommendations to strengthen banking rules. Michael Barr, Vice Chairman of the Federal Reserve for Banking Supervision, Martin Grunberg, Chairman of the Board of Directors of the Federal Deposit Insurance Corporation, and Nelly Liang, Undersecretary of the Treasury for Domestic Financial Affairs, stated, during their testimony before the Senate Banking Committee yesterday, Tuesday, that the banks that With more than $100 billion in assets, it may need a more rigorous oversight process. They added that the government would also review the federal insurance program that protects deposits. Barr said the Fed’s investigation will also look at the power of social media in fueling online panic, and results will be announced by May 1.