The leaders of the House Financial Services Committee sent letters to the heads of the Federal Deposit Insurance Corporation (FDIC) and Treasury Department, seeking information on the Biden Administration’s response to recent bank failures.
Specifically, Committee Chair Patrick McHenry (R-NC) and Vice Chair French Hill (R-AR) want to know if a viable private sector option exists for the two failed banks, Silicon Valley Bank and Signature Bank.
“Given the unprecedented speed of the bank failures and subsequent effects on the U.S. 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,” the lawmakers wrote to FDIC Chair Martin Gruenberg.
They penned a similar letter to Treasury Secretary Janet Yellen.
“As you note, the FDI Act requires the Federal Deposit Insurance Corporation (FDIC) to identify the least cost resolution of a failed bank for the Deposit Insurance Fund (DIF). Only when the least cost resolution ‘would have serious adverse effects on economic conditions or financial stability’ may the Secretary of the Treasury, in consultation with the President and on the recommendations of the FDIC Board of Directors and Federal Reserve Board (FRB), authorize the FDIC to take action to mitigate such effects,” they wrote to Yellen. “As part of its notification, section 13 requires the Treasury Secretary to include a description of the basis for making a systemic risk determination. Notwithstanding your March 12th letter, the basis for your determinations remains unclear.”
They asked Gruenberg and Yellen a series of questions and requested answers by April 1.