Despite the looming debt-ceiling crisis that has taken center stage in Washington in recent weeks, lawmakers have not forgotten this year’s other financial crisis: the March US bank failures that sparked turmoil in the regional banking sector.
The US Senate Committee on Banking, Housing and Urban Affairs will hold three hearings next week centering on the collapse of Silicon Valley Bank and Signature Bank in March.
The three sessions are scheduled to take place from Tuesday through Thursday. The board will discuss the former CEO of Silicon Valley Bank, Greg Baker, the former chairman and co-founder of Signature Bank, Scot Shay, and the former president of the bank, Eric Weil.
Inspector General Mark Bellack, a member of the Bureau of Consumer Protection, as well as Vice President Oversight of the Federal Reserve Board of Governors, Michael Barr, have also been called. In addition to Martin Gruenberg, Chairman of the Board of Directors of the Federal Deposit Insurance Corporation, and finally, Adrian Harris, Superintendent of the New York State Department of Financial Services.
Federal regulators were first called in to answer questions about bank collapses from the Senate Banking Committee and the House Financial Services Committee in March.
The Federal Reserve and the Federal Deposit Insurance Corporation have released reports detailing management errors at Silicon Valley Bank and Signature Bank as well as errors by federal regulators in properly addressing the red flags that preceded the banks’ demise.
According to CNN, the Federal Reserve recommended a comprehensive reassessment of its regulatory and supervisory functions, and Barr called on the central bank to strengthen those operations. Calls for stronger regulation of the banking sector accelerated this month after the collapse of First Republic Bank, which was taken into custody and sold to JPMorgan Chase on May 1 as part of a bill to address “regulatory shortcomings” in banking security. .
At the same time, US consumers are worried about the uncertainty surrounding the economy and a possible default on US government debt.
A recent University of Michigan survey revealed that the university’s index of consumer confidence fell 9% this month, with more than half of its gains since rebounding from a record low in June 2022 reversing.
A separate report from the Federal Reserve Bank of New York showed that US households are becoming increasingly frugal. Monthly household spending growth fell to 5.4% from a revised 7.1% in December. Meanwhile, expected monthly spending growth fell to 3.4% in April, hovering around levels not seen since December 2020.
There are many headwinds facing the US economy and consumers, including tightening credit standards, a looming debt ceiling crisis and the possibility of a recession later this year. These factors have affected consumers’ confidence in the economy and their financial portfolios.