Fed/Barr: Banks to be regulated more aggressively

Fed Vice Chairman for Supervision Michael Barr said the agency will consider rule changes for large regional banks in the wake of bank failures and will require more aggressive oversight of the banks. The Fed will announce a plan to tighten capital requirements for banks this summer, and supervisors will require more aggressive oversight of the banks in the wake of recent bank failures, the top Fed regulatory official told Congress on Tuesday. The agency is “carefully considering” rule changes for larger regional banks with assets exceeding $100 billion, Fed Vice Chairman for Supervision Michael Barr said. He said the Fed expects to unveil a plan this summer to overhaul its capital and liquidity rules, which would set off an ambitious rule rewrite for banking regulators. The new regulation would include tougher rules The move could include requiring them to factor in unrealized losses on their books when considering capital levels. Such banks previously had loosened rules under the Trump administration. Bank regulators are under intense scrutiny after the collapses of Silicon Valley Bank and Signature Bank triggered a plunge in global banking stocks and raised concerns the crisis was spreading. Senior officials from the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency also testified before the House Financial Services Committee. The officials vowed to take a tougher stance and urge regulators to be more aggressive after their own reports on the collapses showed that regulators were aware of some problems but did not act quickly enough to address them. “The fundamental problem was the failure of examiners to enforce compliance when problems were identified,” FDIC Chairman Martin Gruenberg said. Barr specifically said the Fed investigated the payment of executive bonuses at Silicon Valley Bank hours before it was closed by regulators, calling it “outrageous.” But Republicans on the committee reportedly urged officials to consider using their existing tools more effectively rather than writing new rules. “You used this crisis to justify the longstanding priority of innovators to increase capital requirements and impose more regulation on banks,” said Representative Patrick McHenry, who chairs the panel. Tuesday’s hearing marked the regulators’ first appearance before Congress since the FDIC agreed to sell bankrupt First Republic Bank to JPMorgan Chase & Co. this month. Former SVB CEO Greg Becker also testified on a separate panel Tuesday. He said in prepared testimony that rapid interest rate hikes and rumors fueled by social media led to an “unprecedented” banking run that sank his firm.