Editor’s Note: The legislative push from the Chairman of the Subcommittee on Financial Institutions and Monetary Policy comes after the SVB and First Republic Bank collapses.
Washington, D.C.— Today, the House Financial Services Committee passed historic legislation to bolster Congressional oversight of the Federal Reserve, Federal Deposit Insurance Corporation (FDIC), and the Financial Stability Oversight Council (FSOC). Among the reforms are expansions of reporting requirements for the FDIC and Federal Reserve as well as enhanced transparency over FSOC activities. The reform package was led by U.S. Congressman Andy Barr (R-Ky), Chairman of the Subcommittee on Financial Institutions and Monetary Policy. Barr’s proposal, the Increasing Financial Regulatory Accountability and Transparency Act, molds together legislation originally introduced by U.S. Congressman Barry Loudermilk (R-GA), U.S. Congressman Scott Fitzgerald (R-WI), and U.S. Congresswoman Monica De La Cruz (R-TX), who all serve as House Financial Services Committee members.
Additionally, the Increasing Financial Regulatory Accountability and Transparency Act would require the head of each Federal banking agency to testify before the House Financial Services Committee and the Senate Banking Committee twice per year. Currently, only the Fed’s Vice Chair for Supervision must testify before Congress. Lastly, the package includes a provision requiring the Vice Chair of Supervision to have experience in bank supervision or have worked in banks.
“The failures of bank supervisors significantly contributed to the largest bank failures in modern American history,” said Congressman Andy Barr (KY-06). “Simply put, bank supervisors were asleep at the switch, despite having all the tools necessary to prevent these banks from collapsing. These commonsense reforms take meaningful steps to increase Congressional oversight of bank supervisors to ensure they are effectively performing their function and to ensure the stability in our banking system going forward.”
“Throughout our examination into recent bank failures, one thing has become abundantly clear: there is a woeful lack of transparency and accountability with respect to the federal regulators’ decision making,” said Chairman McHenry. “Subcommittee Chairman Barr’s Increasing Financial Regulatory Accountability and Transparency Act will ensure that Congress is informed as decisions are made and not provided with self-serving information after the fact. This bill is a strong first step to ensure the banking regulators are acting within the authorities provided by Congress.”
“The recent bank failures of Silicon Valley Bank, First Republic Bank, and Signature Bank has catapulted the need to increase the level of transparency within our bank regulators, so that Congress can react more effectively during future crises,” said Congressman Barry Loudermilk (R-GA). “That is why I’m proud to support this H.R. 3556, which contains three bills I co-led, that will help improve transparency within the FDIC, Federal Reserve, and FSOC. I want to thank Congressman Barr and my colleagues on the Financial Services Committee for their hard work on this legislation and for ensuring that Americans can continue to have confidence in our banking system and the oversight process.”
As Vice Chairman of Supervision, Michael Barr deflected blame for the lack of supervision involving the recent bank failures. Congress must step in to conduct greater oversight of the Federal Reserve, FDIC, and FSOC to ensure our regulators are putting their best foot forward in addressing a complicated economic environment. This bill will also make sure that, moving forward, individuals nominated to be Vice Chair of Supervision will possess real-world banking experience to demonstrate they are competent for the job. Rep. Scott Fitzgerald (WI-05)
“As evidenced by the recent failures of Silicon Valley Bank, Signature Bank, and First Republic Bank, federal regulators missed opportunities to monitor the health of these institutions and hold them to the standards set by law,” Congresswoman Monica De La Cruz (TX-15) said. “It put the assets of millions of Americans at risk and brought unnecessary fear to Americans. Accountability is a two-way street. Not only should the leaders of these banks be accountable for their failures, but the regulators charged with overseeing these institutions should also answer to Congress. That is why I introduced the Banking Regulator Accountability Act - because the American people deserve answers.”
“Americans need to be able to trust our financial system. Federal regulators – while having existing laws in place to take proper action against the risks posed by recent bank failures – clearly dropped the ball on conducting proper supervision of Silicon Valley Bank and Signature Bank. We cannot afford for this to be a pattern,” said Congresswoman Young Kim (CA-40). “The Increasing Financial Regulatory Accountability and Transparency Act will enact meaningful reforms to boost transparency of bank supervisors and ensure they are doing their jobs. As the only Republican from California on the Financial Services Committee, I will continue to demand answers, follow the facts and fight for American taxpayers.”