Republicans Push for Answers over Banking Failures

Republican policymakers have written to state and federal regulators demanding information about how they handled the recent banking failures that have hit the industry.

Representatives on the US House Committee on Financial Services have called for answers from the authorities including the Financial Stability Oversight Council (FSOC), state regulators in New York and California, and the Federal Deposit Insurance Corporation (FDIC).

The series of letters sent last week — signed or supported by Republicans including committee chairman Patrick McHenry and vice chairman French Hill — asked dozens of questions of each organization, including specific details of how Signature Bank and Silicon Valley Bank were regulated.

In their letter to FDIC chairman Martin Gruenberg, McHenry and Hill stated: “Given the unprecedented speed of the bank failures and subsequent effects on the US financial system, it is critical that Congress understand the events leading up to and following the failures of both Silicon Valley Bank and Signature Bank. In particular, Congress must understand the FDIC’s role both as receiver for the failed banks and as the primary federal banking agency for Signature Bank.”

They pushed for details of all supervisory communications between the FDIC and Signature Bank, as well as the reasons for regulators invoking a “systemic risk exception” that allowed Silicon Valley Bank to be placed into receivership. The committee members also demanded details of how bids for Silicon Valley Bank before its collapse were handled.

Meanwhile, Bill Huizenga, chairman of the Subcommittee on Oversight and Investigations, and Andy Barr, chairman of the Subcommittee on Financial Institutions and Monetary Policy, co-signed letters to Janet Yellen in her capacity as chair of the FSOC, and Richard Delmar, chair of the Council of Inspectors General on Financial Oversight.

In the correspondence, the committee members questioned the transparency of both organizations and called for more details of meetings related to the actions taken involving the two banks.

In letters to New York and California regulators, the politicians called for additional disclosures around the regulation of Signature Bank and Silicon Valley Bank, as well as their involvement in bids for the failed banks’ assets.