Biden Requests Banking Restrictions 

( The Washington Post reported earlier this week that the Biden administration is getting plans ready to push regulators who oversee federal banking to institute new rules on mid-sized banks throughout the country. 

The Post, citing two people who are familiar with those preparations, reported that this is being done in the wake of Silicon Valley Bank collapsing earlier in March.  

The recommendations include a push for specific rules to be put in place for banks that had from $100 billion to $250 billion in deposits. The Federal Reserve and Congress deregulated these rules during the Trump administration, which means that the Biden administration is just looking to reinstate them. 

White House officials couldn’t be reached by Reuters for comments about the plans that The Post reported on. 

Even if the White House does eventually release a plan and begin to push these banking rules to be reinstated, they would need to be implemented by three different agencies, according to The Post. Those agencies are the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve Bank. 

Some of the moves being discussed are requiring these banks to have higher requirements for capital. They also might require the banks that fit into that deposit range to hold more safe assets, relative to the riskier loans they take and give out. 

The Post also reported that the Biden administration might push to require these banks to have crisis-ready plans for dissolution and undergo the “stress tests” on a more frequent basis to ensure they’re ready for whatever might come their way. 

Ultimately, the goal of these additional regulations would be to ensure that another big run on banks doesn’t occur, and that the federal government doesn’t have to step in to bail out depositors like they did in this most recent situation. 

While this is happening, lawmakers in the House of Representatives held hearings this week, during which they laid into the country’s top bank regulators. Members of the House questioned whether the regulators were competent enough to do their jobs and whether they were “asleep at the wheel” while both SVB and Signature Bank collapsed nearly overnight in early March. 

Republican Representative Patrick McHenry of North Carolina, the chair of the House Financial Services, said at the beginning of the hearing: 

“We need competent financial supervisors, but Congress can’t legislate competence.” 

Present at the two days of hearings were some of the top officials at the FDIC, Treasury and Federal Reserve. 

The ranking member on the committee, Democrat Maxine Waters of California, questioned if the warnings that the regulators supposedly repeatedly delivered to officials at SVB about the long-term interest risks it had as well as the health of its balance sheet were sufficient enough.  

She said: 

“The light touch cautions from the Fed to SVB management are clearly not what Congress intended for bank supervision.” 

Another Democratic representative from California, Juan Vargas, was more blunt with his words, saying to the regulators: 

“It seems like [SVB] blew you guys off, and you didn’t do anything.”