Congress grills top federal financial officials over recent bank failures

WASHINGTON, D.C. — Members of Congress are pushing for answers about recent bank failures.

Lawmakers want to know what top financial regulators are doing to prevent future incidents. Leaders from both parties say these recent bank failures are a wakeup call for regulators.

On Wednesday, top officials from the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corporation or FDIC were in the hot seat on Capitol Hill. They all faced questions about what caused the collapses of Silicon Valley and New York Signature Banks earlier this month.

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“I heard no one say we were part of the problem. We need to look at us being part of the problem and we need to look at us being part of the solution,” said Rep. Pete Sessions, R – Texas.

“We also need answers from the CEOs who not only ran these banks into the ground but enriched themselves,” said Rep. Maxine Waters, D – California.

Fed official Michael Barr explains regulators issued warnings to Silicon Valley Bank back in 2021 but he said managers failed to take steps to fix the problems.

“The events of the few weeks raise questions about what more can be done and should be done so that isolated banking problems do not undermine confidence in healthy banks and threaten the stability of the banking system as a whole,” said Barr, Board of Governors of the Federal Reserve

GOP leaders believe officials didn’t aggressively use their tools in a way that could have prevented these failures. Meanwhile Democrats point to the rollback of financial regulations on mid-sized banks during the Trump administration.

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Now both parties want these agencies to take more responsibility and learn lessons from what happened here.

The Federal Reserve agrees.

“We’re focusing on our review, on our own supervision, ways we could have done better as supervisors at the federal reserve and ways that our own regulatory structure might have played role with respect to this firm,” said Barr. “This is inward looking - it’s a self-assessment, a prudent thing, I think for us to do. It’s what we tell banks to do. It’s sort of the first thing you have to do to understand risk within your own institution - that’s why we’re doing it.”

Democrats are pushing new legislation that would tighten banking regulations but it’s unlikely that measure will pass because Congress is divided.