President

joe

The Biden administration is urging regulators to tighten the rules

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banks, the strongest move yet in response to the banking crisis that led to the bankruptcy of a few regional lenders.

The White House on Thursday called on federal banking agencies, in conjunction with the Treasury Department, to implement a series of changes. None of the measures require congressional approval, the White House said in a statement, though it’s not clear whether regulators will enact them.

The package bears the fingerprints of one of Biden’s new top aides, former Vice Chairman of the Federal Reserve Lael Brainard, who has long warned that she thought the deregulation legislation passed in 2018 went too far. Brainard took over Biden’s National Economic Council last month.

The changes include reinstating rules for banks with assets between $100 billion and $250 billion, a category Silicon Valley Bank, one of the institutions that failed, fell into, including liquidity requirements, enhanced stress testing and

so called

living wills showing how to liquidate banks of that size.

The White House also called for:

Annual stress tests for banks in that range, instead of every two years Reduce time to conduct stress tests once banks reach $100 billion in assets Strengthen supervisory tools to ensure banks can withstand rising interest rates.

The White House supported calls for community banks not to share the cost of replenishing the deposit insurance fund used to hold back SVB and Signature Bank, which also failed. The White House appealed to the Federal Deposit Insurance Corp. to replenish the fund without relying on community banks.

Biden says US banks are in good shape, unrest will subside

The moves come as Biden looks for tools to further calm the banking crisis and avoid another bust.

A White House official, who briefed reporters on the announcement, said it would ultimately be up to regulators to make the changes, but that the administration had spoken with them as it prepared its proposals.

The official told reporters that the government believes the situation has stabilized strongly in recent weeks after the initial interventions. The proposed changes are designed to ensure the system remains resilient going forward, the official said.

The White House is closely monitoring deposit outflows as a yardstick for the order, two other officials said, speaking separately on condition of anonymity.

Brainard’s presence in Biden’s inner circle in the early days of the crisis helped direct the initial response, and officials said she was particularly strong in helping to quell the banking contagion. Brainard’s tenure at the Fed was marked by repeated warnings that deregulation brought about by the 2018 law carried risks, including for banks with deposits between $100 billion and $250 billion.

Column: The collapse of the Silicon Valley Bank is Silicon Valley’s problem, not yours

Treasury Secretary Janet

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Yellen also warned in a speech Thursday that deregulation efforts may have gone too far and contributed to the recent crisis.

Republicans quickly fired back at the White House proposals. North Carolina House Financial Services Committee Chairman Patrick McHenry said in a statement that the Biden administration continues to politicize the failure of SVB and Signature Bank to push through long-held progressive priorities that have nothing to do with the causes of the collapse.

The Bank Policy Institute, a trade group for the largest banks, urged caution when adopting new regulations.

It would be a shame if the response to poor management and oversight oversight at SVB were additional regulation for all banks that would impose significant costs on the U.S. economy in the future, Greg Baer, ​​the group’s CEO, said in a statement. . The Fed has only just begun its promised review. This has a strong sense of ready, fire, aim.

The Fed has launched an investigation into the events leading up to the collapse of California’s Silicon Valley Bank, and Congress is likely to launch its own investigation.

Better Markets, a Washington-based financial watchdog, welcomed the White House proposal.

Everything you need to know about the spectacular collapse of Silicon Valley Bank

We look forward to swift action by the agencies following today’s important words and guidance from the White House, said Dennis M. Kelleher, the group’s CEO.

Progressive lawmakers have pointed to the deregulation drive of 2018 as contributing to the bank failures, while conservative lawmakers who supported deregulation have placed the blame elsewhere, such as regulators.

Rolling back banking regulations under the former president

Donald

Trump garnered the votes of more than a dozen Democratic senators.

designer

US

Treasury Secretary Steven Mnuchin defended that rollback Thursday.

We passed bipartisan legislation on banking reform. I know there’s a lot of discussion now that that was the cause. I think that’s ridiculous, Mnuchin said at the FII Institutes Priority Summit in Miami Beach, Florida. It should be the case that regulators require banks of more than $100 billion to conduct stress tests on interest rates.

Wingrove writes for Bloomberg. Bloomberg reporters Jennifer Jacobs, Jordan Fabian, Jenny Leonard and Allyson Versprille contributed to this report.