The Federal Reserve (Fed) is studying tougher rules for banks with more than $100 billion in assets and will ensure that supervisors better police banks in the face of recent bankruptcies, said Michael Barr, vice president of Supervision.
The rules under review include a requirement that they take into account unrealized losses on their books when considering capital levels. Lenders faced loose rules under the Trump administration.
Bank watchdogs are under intense scrutiny after the collapses of Silicon Valley Bank and Signature Bank sent global bank shares tumbling and sparked fears of contagion.
For this reason, officials from the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency testified before the Financial Services Committee of the House of Representatives.
They vowed to take a tougher stance and encourage supervisors to be more aggressive after their own reports on the bankruptcies found that watchdogs were aware of some of the problems but did not move fast enough to fix them.
“The main problem was the inability of examiners to enforce the rules when problems were found,” said FDIC Chairman Martin Gruenberg.
However, Republicans on the committee urged officials to consider making better use of their tools, rather than writing new rules.
“They have used this crisis to justify the long-time priority of progressives to increase capital requirements and impose more regulations on banks,” added Rep. Patrick McHenry, who chairs the panel.
