“Irresponsible” not to fix the American banking system after the crisis
https://sputniknews.com/20230328/irresponsible-not-to-fix-us-banking-after-crisis—fed-supervisory-chief-1108885025.html
‘Irresponsible’ not to fix US banking system after crisis – Fed oversight chief
‘Irresponsible’ not to fix US banking system after crisis – Fed oversight chief
It would be ‘irresponsible’ not to fix the flaws in the US banking sector after the liquidity crisis uncovered this month, Federal Reserve Vice Chairman for Surveillance Michael Barr said as he pledged to strengthen the system that he kept resilient.
2023-03-28T20:28+0000
2023-03-28T20:28+0000
2023-03-28T20:31+0000
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Silicon Valley Bank Collapse
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SVB has become the shorthand for the US banking crisis that erupted three weeks ago after poor risk management and other ‘safe’ practices at California-based Silicon Valley Bank resulted in billions of dollars customer deposit withdrawals. Almost simultaneously, two other banks – Signature and First Republic – faced similar deposit flows, suggesting contagion. The US banking crisis took on an international dimension after famed Swiss investment bank Credit Suisse went bankrupt two weeks ago and had to be taken over by rival and compatriot UBS. In recent days, German banking giant Deutsche Bank has also been in trouble as worries over its balance sheet led to an increase in its default insurance, sending its shares tumbling. As a former senior Treasury Department official and expert on financial regulation, Barr was instrumental in crafting the Dodd-Frank regulations that prohibited U.S. banks from taking excessive risk in the wake of the financial crisis. of 2007/2008 which led to what is known as “the great recession”. Over the years, he has regularly warned regulators against getting too complacent and reversing steps deemed necessary to prevent another financial crisis. He is now leading the Fed’s investigation into the SVB, playing a leading role in explaining how the most recent fallout in the banking industry forced the government’s Federal Deposit Insurance Corporation, or FDIC, to step in and take the lead. control of troubled banks in order to avoid a general financial collapse. The FDIC used special emergency authority to protect all depositors from the liquidation of SVB and Signature Bank, even accounts well beyond the usual $250,000 limit. Authorities have said in recent weeks that they are considering expanding the powers of the FDIC to issue fines and take punitive action against banks that fail to follow the rules.
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american banking industry, collapsing silicon valley bank, silicon valley bank, world bank, global banking system, banking industry, american federal reserve, credit suisse group ag, what are the effects of the dodd-frank repeal, american federal deposit insurance corporation michael barr, what the fed will do about the banking crisis, american banks future outlook
american banking industry, collapsing silicon valley bank, silicon valley bank, world bank, global banking system, banking industry, american federal reserve, credit suisse group ag, what are the effects of the dodd-frank repeal, american federal deposit insurance corporation michael barr, what the fed will do about the banking crisis, american banks future outlook
WASHINGTON (Sputnik) — It would be “irresponsible” not to fix the flaws in U.S. banks after the liquidity crisis uncovered this month, Federal Reserve Vice Chairman Michael Barr said on Tuesday. that he was committed to strengthening the system he kept resilient. .
“I foresee the need to strengthen capital and liquidity standards for companies larger than $100 billion,” Barr said in testimony before a Senate banking panel. “It is essential to improve capital and liquidity rules. We are in the process of reviewing our own practices after the failure of the SVB, it would be irresponsible not to do so.”
Asked what particular solutions he could think of for U.S. banks to avoid a recurrence of this crisis, Barr said: “The Fed has substantial discretion to change the rules for businesses. [holding] between $50 billion and $100 billion in assets.”
The FDIC used special emergency authority to protect all depositors at SVB and Signature Bank in liquidation, even those with accounts well over the usual $250,000 limit.
The decision to cover all uninsured depositors at the two exposed banks was “a highly consequential decision that has implications for the system,” said FDIC Chairman Martin Gruenberg, who attended Tuesday’s hearing with Barr. .
Authorities have said in recent weeks that they are considering expanding the powers of the FDIC to issue fines and take punitive action against banks that fail to follow the rules.
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