WASHINGTON — Senate Banking Committee Chairman Sen. Sherrod Brown, D-Ohio, asked banking regulators to tighten rules on banks following the collapse of Silicon Valley Bank and Signature Bank and the extraordinary government intervention to make both institutions' uninsured depositors whole.
"Silicon Valley Bank and Signature Bank served venture capital firms and the broader tech industry – with sophisticated clients as well as small and medium sized businesses," Brown said in the letter to the Federal Reserve, Federal Deposit Insurance Corp. and Treasury Department. "While the banks were based in California and New York, respectively, their failures reached throughout the country – including many businesses in Ohio – putting small businesses at risk of not being able to make payroll or to pay suppliers and potentially losing their hard-earned money because of risky decisions and poor management by the banks' executives."
Brown has been skeptical that any legislative action would be coming from Congress, given the deep partisan divide that's expected to hamstring lawmakers for the next two years. He's also facing opposition within his own party – 12 Democrats voted for the bill that allowed some rules around the supervision of mid-sized banks to be weakened.
Brown said that he wants regulators to "strengthen the guardrails for banks to prevent failures and mitigate contagion."
As the regulators consider what went wrong in the failure of each bank, Brown said that they should consider the magnitude of uninsured deposits and the role of social-media-led coordination among depositors and any regulatory gaps or shortfalls.
Brown also said that the administration should "hold those responsible for these bank failures responsible for their actions," including bonus and compensation clawbacks or taking "other appropriate regulatory actions."
