Sen. Brown urges review of bank failures by federal regulators

U.S. Sen. Sherrod Brown (D-OH) is asking federal regulators to conduct a review of the circumstances surrounding the failures of Silicon Valley Bank and Signature Bank.

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Specifically, he is urging regulators to consider the magnitude of the banks’ uninsured deposits and the role that social media-led coordination among customers played in causing or accelerating the failures.

“The rapid deterioration and ultimate failure of these banks, which followed on the heels of the voluntary liquidation of crypto-friendly Silvergate Bank, created concern that a panic could sweep across the rest [of] the banking system, causing chaos for Main Street businesses. The U.S. banking system is unique, with thousands of institutions ranging from small banks and credit unions that serve their local communities to large regional banks and money-center megabanks with global reach. The stability of our banking system depends on every depositor resting assured that their money is safe at any bank, no matter its size or location,” Brown wrote to the heads of the Treasury Department, the Federal Deposit Insurance Corporation (FDIC), and the Federal Reserve.

Brown would also like to see regulators Identify and close regulatory gaps, shortfalls, or failures by state or federal regulators that contributed to the banks’ failures. In addition, he calls for regulators to hold those responsible for these bank failures accountable for their actions and to claw back executive bonuses and compensation, if applicable.

Further, Brown said regulators must strengthen the guardrails for banks to prevent future failures and mitigate contagion and panic risks.

Brown is chairman of the U.S. Senate Committee on Banking, Housing, and Urban Affairs.