New Rules For Midsize Banks Are Sought By The White House

In an effort to toughen regulation of mid-sized banks, the White House intends to issue a series of directives.

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As Trade Algo reported, sources who were not identified cited the recent collapses of Silicon Valley Bank and Signature Bank as the triggers for congressional action, which could be announced within days, according to the report.

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It has been reported that in an effort to toughen penalties for executives responsible for bank failures, President Biden has already called for laws that would impose tougher penalties on them.

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Aside from that, nothing further has been chosen by the administration regarding what changes it would like to see made, the report states.

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In accordance with statements made by the company in the past, it may call for restoring parts of the Dodd-Frank law that were eliminated during the Trump administration. The report suggests that the government should either temporarily extend federal deposit insurance to all bank customers or raise the cap above the current maximum of $250,000, or restore other financial regulations that were altered during the previous administration.

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Because institutions of that size have been under pressure for some time now, the administration is likely to issue new recommendations that include banks with assets of between $100 million and $250 million. Silicon Valley Bank and Signature Bank both fell within the range of those two banks, and both of these banks went bankrupt in the same manner, and this demonstrated that even a bank of this size could pose a serious risk to the entire banking system through its collapse.

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During a congressional hearing on the day before this report, lawmakers in the House of Representatives grilled regulators, asking why they hadn't used the tools that were at their disposal before the recent Bank Failures, during this time of crisis.

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A new bill was also introduced on Wednesday by lawmakers, called the Failed Bank Executives Clawback Act of 2023, which would impose a requirement that federal regulators make sure that compensation was clawed back from any executives whose banks failed as a result of their actions.

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The Federal Reserve Chair Michael Barr and FDIC Chairman Martin Gruenberg spoke about possible future regulations regarding banks during an earlier session on Tuesday (March 27), during which they discussed possible future regulations regarding banks.

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According to both officials, possible proposals included exploring liquidity rules for banks, improving stress tests and reviewing current deposit insurance rules during the Senate committee hearing.