WASHINGTON — House Financial Services Committee Chairman Rep. Patrick McHenry said on Sunday that he believed “all options should be on the table” to avoid further crisis in the banking sector.Including allowing a large, too-big-to-fail firm to buy a small, troubled firm.
In an interview with “Face the Nation,” McHenry said Congress must explore the circumstances that led to the shutdown.And Two days later, as well including whether there was an opportunity for a larger bank to step in and rescue the two failing institutions.
The North Carolina Republican said that “what I need to get to the bottom of the investigation in Congress is the who, what, when, where, why and how of this bank failure and the decisions made” by the Biden administration last weekend.To shore up the banking system and backstop deposits in those banks.
“We’ve seen a private sector response to support a bank,” he said. “Was that a viable option last weekend? Or was there an ideological lens that prevented them from taking on these institutions and making it less turbulent for America?”
McHenry said last weekend that lawmakers did not know whether the Biden administration had a viable buyer for Silicon Valley Bank, after Congress received comments from bankers that they had refrained from making a bid to acquire the failed lender.
“I think we know we had a very rough week for American banking, and we lost confidence,” he said. “And I think it calls into question what happened last weekend.”
When asked whether a systemically large bank would be able to buyA regional lender hit by the collapse of Silicon Valley Bank, McHenry said “all options should be on the table.”
The rapid failure of Silicon Valley banks has renewed scrutiny on federal banking regulators and prompted debate on Capitol Hill over whether Congress should tighten rules on mid-sized banks. Sen. Elizabeth Warren, a Massachusetts Democrat,“Sunday that he favors a plan to raise the Federal Deposit Insurance Corporation’s (FDIC) insurance cap above $250,000, although McHenry said he has not had a “single conversation” with the White House or the Biden administration about changing the deposit insurance level.
“What I will do though, legislatively, and in an oversight function is determine whether we need to address the level of FDIC deposits,” he said. “We did it after the last financial crisis, from $100,000 to $250,000.”
But McHenry said “all options are on the table” to respond to the banking crisis.
“If we do that, we have to understand their trade-offs,” he said. “It’s not a pure play of allowing a broader set of insurance coverage. It costs the financial system significantly, especially community banks. We have to look at it very carefully.”
McHenry has already scheduled his Financial Services Committee hearing with the FDIC chief and the Federal Reserve’s vice chair for oversight. But he did not say whether he plans to call San Francisco Fed chief Mary Daly to answer questions from Congress.
“The decisions that were taken last weekend, from Thursday to Sunday night we need to understand whether there is a viable solution for the private sector. We also need to understand the underlying reasons for the collapse of these banks and we are going to get that,” he said. “The question of the San Francisco Fed is a question of supervision. We have to get deeper into whether it’s a supervisory problem, a regulatory problem, a bank mismanagement problem, maybe all three frankly.”