House Financial Services Chair to Probe ‘Supervisory Failures’ at SVB

A top House Republican says Americans should be confident in the country’s financial system in spite of recent banking failures.

“The Fed is doing what the Fed is supposed to do,” Rep. Patrick McHenry, chair of the House Financial Services Committee, told CNBC’s Squawkbox Tuesday (March 14). “The FDIC is doing what the FDIC is supposed to do in conformance with the law.”

What the FDIC (Federal Deposit Insurance Corp.) did in this case was take control of a trio of banks in the past week: Silvergate, Silicon Valley and Signature.

On Monday, the FDIC began giving SVB depositors access to their funds after moving deposits to a new “bridge bank.”

Those actions followed the Sunday announcement by officials from the Federal Reserve, FDIC and U.S. Treasury that depositors would have access to their funds beginning Monday.

“This step will ensure that the U.S. banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth,” the agencies said at the time.

The FDIC may also try to sell SVB after a failed auction this weekend. A report Monday by The Wall Street Journal said the FDIC told Senate Republicans that now that regulators have said that a failure of the bank would threaten the entire financial system, the government can also offer additional incentives to potential buyers.

McHenry — who had earlier this week called the collapse of Silicon Valley Bank (SVB) “the first Twitter-fueled bank run” — also said this week that the committee wanted to meet to hear from banks and regulators.

“You have the decisions of the institution, and you have decisions of the supervisors,” the North Carolina Republican said in an interview with Punchbowl, per a Reuters report. “One is a management failure. The other is supervisory failure. And we’re going to look into those things.”

His comments came the same day that President Joe Biden called for an investigation into the failure of SVB and Signature Bank.

“There are important questions of how these banks got into the circumstances in the first place,” the president said during a speech Monday (March 13). “We must get the full accounting of what happened and why those responsible can be held accountable.”

Like McHenry, Biden sought to reassure the public: “You can rest assured our banking system is safe. Your deposits are safe.”