The House Financial Services Committee has announced a new hearing on the recent bank failures. The Oversight and Investigations Subcommittee Hearing will meet to discuss the “Oversight of Silicon Valley Bank and Signature Bank: GAO’s Preliminary Review.”
Both Silicon Valley Bank and Signature Bank suffered from excessive interest rate risk. As long-term debt investments declined in value, due to fast rising interest rates, these banks found themselves in a liquidity crunch. As most banking is digital today, account holders rushed to move funds into other financial services firms – typically a GSIB or globally systemically important bank like JP Morgan. These banks are deemed to be too big to fail and thus have an implicit expectation of government support if things get rocky.
At the same time, bank regulators – who hold incredible power over these firms – failed to act appropriately.
The hearing will be live-streamed on the Committee website at 1oAM Thursday, May 11th.