Senate Banking Committee Holds Hearing on Recent Bank Collapses, Calls for Tougher Regulations

On Tuesday, the U.S. Senate Committee on Banking, Housing, and Urban Affairs, also known as the Senate Banking Committee, held a hearing to discuss the recent bank collapses in the United States and the regulatory response. Throughout the testimonies, digital assets and crypto businesses were mentioned. Senate Banking Committee chairman Sherrod Brown claimed on Tuesday that Signature Bank “found itself in the middle of Sam Bankman-Fried’s crime spree at the crypto exchange FTX.”

Regulators Highlight Bank Exposure to Crypto Asset Businesses in Senate Banking Committee Hearing About Bank Failures

Following the collapse of Silvergate Bank, Silicon Valley Bank, and Signature Bank, the Senate Banking Committee held a hearing to discuss the situation and its implications. The hearing witnesses included Martin Gruenberg, chairman of the Federal Deposit Insurance Corporation (FDIC); Michael Barr, vice chairman for supervision with the Board of Governors of the Federal Reserve; and Nellie Liang, the Treasury’s domestic finance undersecretary, in addition to committee chairman Sherrod Brown and ranking member Tim Scott.

Senate hearing on recent bank failures happening now. All 3 witnesses are folks I named as architects of OCP2.0https://t.co/xRQ8LONpGA

— nic 🌠 carter (@nic__carter) March 28, 2023

“Right now, none of the executives who ran these banks into the ground are barred from taking other banking jobs, none have had their compensation clawed back, none have paid any fines,” explained Brown. “Some executives have decamped to Hawaii. Others have already gone on to work for other banks. Some simply wandered off into the sunset.” The chairman of the Senate Banking Committee revealed that he is preparing legislation that will enhance regulators’ capacity to enforce fines and penalties, reclaim bonuses, and prohibit executives who are responsible for bank failures from ever working at another bank again.

wow.. Barr tells Senate Banking that SVB told regulators $100b was going to fly out the door on Friday… after $42b fled on Thursday, leading to the bank’s closure. If you don’t think we’re in a new world of potential hyper-speed bank runs, you’re not paying attention.

— Steve Liesman (@steveliesman) March 28, 2023

The FDIC chairman, Gruenberg, discussed the exposure to cryptocurrency businesses in connection to the bank failures. Gruenberg talked about how Silvergate Bank stated that it held “$11.9 billion in digital…