washington — Rep. Patrick McHenry, chairman of the House Financial Services Committee, said Sunday that he believes “all options should be on the table” to prevent another crisis in the banking sector abrupt collapses of two banks this monthincluding allowing a large institution too big to fail to buy a smaller, troubled institution.
In an interview with Face the Nation, McHenry said Congress needed to investigate the circumstances that led to the closures Silicon Valley bank on 10 And Signature Bank of New York two days later, as well as the Biden administration responseincluding whether there was any possibility for a larger bank to step in and bail out the two failed institutions.
The North Carolina Republican said that “what I need to investigate is getting to the bottom of Congress’ who, what, when, where, why and how of these bank failures and the decision on” by the Biden administration last weekend take immediate action to shore up the banking system and keep deposits in those banks safe.
“We saw a response from the private sector to support a bank,” he said. “Was last weekend a viable option? Or was there an ideological lens preventing them from taking over these institutions and making it less tumultuous for America?”
Transcript: Rep. Patrick McHenry on “Face the Nation”
McHenry said while lawmakers didn’t know whether the Biden administration had a viable buyer for Silicon Valley Bank last weekend, Congress received comments from bankers saying they had been blocked from submitting bids to take over the failed to give to the lender.
“I think we know we’ve had a very rough week for American banking and we’ve lost confidence,” he said. “And I think that begs the question of what happened last weekend.”
Asked if a systemically large bank should be able to buy one troubled banks like First Republica regional lender reeling from the collapse of Silicon Valley Bank, McHenry said “all options should be on the table.”
The rapid failure of Silicon Valley Bank has put federal bank regulators under renewed scrutiny, prompting discussions on Capitol Hill over whether Congress should tighten rules for mid-sized banks. Senator Elizabeth Warren, a Democrat from Massachusetts, said “Face the Nationon Sunday that she endorses a plan to raise the Federal Deposit Insurance Corporation (FDIC) insurance ceiling above $250,000, though McHenry said he has “not had a single conversation” with the White House or the Biden administration about one change in deposit protection.
“However, what I will do legislatively and in an oversight capacity is to determine whether or not we need to be concerned with the level of FDIC deposits,” he said. “We made it after the last financial crisis and went from $100,000 to $250,000.”
But McHenry said “all options are on the table” to respond to the banking crisis.
“If we do that, we have to understand their trade-offs,” he said. “It’s not a gamble to allow greater insurance coverage. It costs the financial system and especially the community banks significantly. We need to look at that very carefully.”
McHenry has already scheduled his Financial Services Committee hearing with the FDIC chairman and the Federal Reserve vice chairman on oversight. But he did not say if he intends to see Mary Daly, San Francisco Fed Chair, to answer questions from Congress.
“We need to understand the decisions that were made from Thursday to Sunday evening last weekend about whether or not there is a viable solution for the private sector. We also need to understand the underlying causes of the collapse of these banks, and we will get to that,” he said. “The question of the San Francisco Fed is one of oversight. We need to get to the bottom of the question of whether or not it’s a prudential issue, a regulatory issue, a bank mismanagement issue, maybe all three in all frankness.”
Open: This is Face the Nation with Margaret Brennan, March 19
Source : news.yahoo.com