Two House Hearings on Bank Failures this Week

Tomorrow, the House Subcommittee on Financial Institutions and Monetary Policy will hold a hearing on the Federal Responses to Recent Bank Failures.

The witnesses scheduled to testify include:

  • Margaret E. Tahyar, Partner, Davis Polk & Wardwell LLP
  • Jonathan Gould, Partner, Jones Day
  • Thomas Michaud, President and Chief Executive Officer, Keefe, Bruyette & Woods
  • Kathryn Judge, Harvey J. Goldschmid Professor of Law and Vice Dean for Intellectual Life, Columbia Law School

As you would expect, the hearing will discuss the failures of Silicon Valley Bank, First Republic Bank, Signature Bank and the actions prior and after by both state and federal regulators as well as the emergency measures by the federal government which effectively backstopped all deposits beyond the $250K FDIC insurance threshold.

In the wake of the failures, several federal entities have published a report which pointed to the cause of the demise of these banks as being poor executive management in adapting to the fast-rising interest rates, inept regulatory oversight, and a tech-fueled digital run on the bank.

Several bills are associated with the hearing – largely focusing on transparency – but legislation is in the works to adapt to the changing bank landscape with some pundits expecting a higher threshold of insurance and, perhaps, additional purchasable insurance as well as other policy changes.

The second hearing, held the following day by the Subcommittee on Oversight & Investigations, is entitled Oversight of Silicon Valley Bank and Signature Bank: GAO’s Preliminary Review.

A sole witness is currently scheduled:

  • Michael Clements, Director, Financial Markets and Community Investment, Government Accountability Office

The GAO is, of course, one of the agencies that reviewed the causes of the bank failures.

Last March, the Chair of the House Financial Services Committee, Patrick McHenry, and the ranking minority member, Maxine Waters, joined in sending a letter to the GAO, demanding an “immediate evaluation and investigation into the events that transpired in the financial system.” The report was published in April.

n Thursday, May 11, 2023, at 10:00 a.m

The hearing on the Federal Responses to Recent Bank Failures is scheduled for Wednesday, May 10, 2023, at 2:00 PM.

The hearing on the GAO report is scheduled for Thursday, May 11, 2023, at 10:00 AM ET.

Both hearings will be live-streamed on the Committee website.

 


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