Joe Biden urges US regulators to tighten rules on big banks in the region

Joe Biden is calling on banking regulators to strengthen supervision and regulation of major banks in the region, as the White House vows to roll back reforms following the fall of Silicon Valley Bank in this month.

The US President’s move comes as policymakers in Washington are moving from emergency response to recent emergency response. banking crisis consider new measures to strengthen the financial system in the long term.

The White House says federal regulators, after consulting with the Treasury Department, should consider scrapping Trump-era rules that relax capital and liquidity requirements for banks. have assets from 100 billion to 250 billion USD.

The White House also called on regulators to explore increasing the frequency of capital stress tests and to reinstate the requirement to submit comprehensive resolution plans for such banks.

“The President believes that the weakening of conventional banking protections and supervision under the Trump administration for major banks in the region should be reversed to strengthen the banking system and protect made by Americans and small businesses,” it said Thursday.

Send deeply divided on Capitol Hill on banking regulations, the White House said Biden was focusing on changes that could be made without new action from Congress.

It said it also wants banks to step up their stress checks “to ensure that banks with $100 billion in assets or more have enough capital to withstand rising interest rates.”

The administration also supported expanding “long-term debt requirements to more banks” and called on regulators to “urgently propose new rules”.

Biden is also calling for the deposit insurance fund, which the Federal Deposit Insurance Corporation relies on to return money to depositors at failed banks, to avoid hitting community banks when This fund replenishes funds with fees from other lenders.

Biden administration officials said an expansion of deposit insurance, which could increase or decrease the $250,000 limit currently in place, could be discussed as part of longer-term changes to regulations bank setting. But the White House did not make any specific proposals on Thursday because such a measure would need congressional approval.

Biden’s call for tougher rules comes as a trio of top US regulators face stiff criticism from lawmakers this week who accused them of “doze off” and fail to adequately supervise and regulate the banking sector.

The White House proposals echo comments from Michael Barr, who leads financial oversight at the Federal Reserve. He suggested during the hearings that there should be stricter capital and liquidity standards for lenders with more than $100 billion in assets.

He also said the Fed, as part of its review of what happened to the SVB, would investigate where it fell short in using its tools as a whole.

The central bank is looking to increase scrutiny of midsize lenders, including bolstering the stress tests it carries out every year, to gauge a lender’s ability to fight back. adverse economic and financial situations.

However, Republican lawmakers countered the idea that stricter regulations are needed, suggesting there would be significant opposition to Biden’s proposals.

“I think that’s what people hate in Washington,” said Senator Katie Britt of Alabama on Tuesday. We have a crisis and you come here not knowing if you are doing your duty or not. You say you want more. That’s not how it works. You need to take responsibility, every single one of you.”

Patrick McHenry, chairman of the House financial services committee, added on Thursday: The Biden administration continues to politicize the failure of SVB and Signature Bank to advance radical priorities that have long been unrelated to the cause of the collapse.”

“Instead of giving more authority to regulators that have fallen asleep on these bank failures, we should hold them accountable for their inability to use current supervisory tools,” he said. have his own.

After the collapse of the SVB, lawmakers backed a number of bipartisan bills to increase oversight of the Fed itself. On Thursday, Elizabeth Warren of Massachusetts progressive Democrat and Republican senator Thom Tillis pushed for the 12 regional banks that make up the Federal Reserve system to be subject to the Freedom of Information Act, which requires requires federal agencies to respond to records requests and to comply with the Freedom of Information Act. request information from Congress.

Warren, along with Rick Scott, a Republican lawmaker from Florida, have also called for the replacement of the Fed’s internal investigator with one appointed by the president.

“We have the same independence and authority for all inspectors general to audit and investigate the board,” the Fed’s internal watchdog said in response to the bill. “We have and will continue to provide strong and independent oversight of both the board and the CFPB.”

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