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Credit unions, NCUA go unmentioned as both parties criticize the other for current crisis.
Depending on their political persuasion, House Financial Services Committee members said Wednesday that banking regulators either moved swiftly to contain the recent banking crisis or were asleep at the wheel and could have prevented it from occurring in the first place.
There was plenty of finger-pointing during the almost five-hour House hearing on the failures of Silicon Valley and Signature Bank. But of note, once again, nobody singled out credit unions or the NCUA for criticism.
“We need competent financial supervisors,” Committee Chairman Rep. Patrick McHenry, R-N.C., said, as the hearing began. “But Congress can’t legislate competence.”
He added, for instance, that Michael Barr, vice chairman for supervision at the Federal Reserve, has spent time on climate and capital standards and not enough time on supervision and enforcement.
Democrats responded that legislation enacted during the Trump Administration loosened the regulatory regime for banks.
“We must rightly blame deregulation,” Rep. Ayanna Pressley, D-Mass., said during the hearing, adding that Republicans had been “in cahoots” with bankers in pushing for deregulation.
Who Testified at the Hearing?
The same three witnesses who testified before the Senate Banking Committee on Tuesday—Barr, FDIC Chairman Martin Gruenberg and Nellie Liang, undersecretary for domestic finance at the Treasury Department—also testified before the House panel.
The three essentially repeated their Tuesday testimony and again promised that, on May 1, they will deliver a report on the bank failures and any lapse in regulation.
Republican Criticism of Regulators
And as on Tuesday, Republicans blasted the regulators and blamed Democrats for the crisis.
Rep. Tom Emmer, R-Minn., who also is House Republican whip, commented, “The collapse of three regional banks over the course of two weeks is directly related to failed Democrat policies.”
A second Republican echoed those sentiments.
“I’ve heard none of you accept responsibility for this,” Rep. Pete Sessions, R-Texas, told the regulators. He added, “I hope this is a wake-up call for the three of you.”
Rep. Blaine Luetkemeyer, R-Mo., agreed, asking Barr, “If you think you need more rules, why were you not enforcing existing regulations?”
Democratic Stance
However, Rep. Brad Sherman, D-Calif., praised the regulatory response, saying, “Our regulators reacted quickly.”
Financial Services ranking Democratic Rep. Maxine Waters of California likewise praised the Biden Administration’s “bold and swift” response to ensure that bank customers do not suffer as a result of the bank failures.
What Happens Next?
Committee leaders promised additional hearings on the issue.
As the hearing ended, McHenry said that there is bipartisan frustration with a lack of transparency and accountability from the agencies supervising the banks.
“We expected many more details,” he added.
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