WASHINGTON, DC – After the U.S. government announced emergency measures to shore up the banking system and backstop deposits at two failed banks, Silicon Valley Bank (SVB) in California and Signature Bank in New York, U.S. Senator Jack Reed (D-RI), a senior member of the Banking Committee, issued the following statement:

“Americans should have confidence in the steps the Biden Administration is taking to keep our banking system safe. 

“SVB and Signature Bank have failed. Americans should know that the banks’ shareholders will not be protected and that the banks’ executives have been removed.  Regulators and bank executives must account for their failures.”

“President Biden and officials at the Federal Reserve and the Federal Deposit Insurance Corporation moved decisively to minimize damage of this failure for American households and businesses.  They are wisely putting the economic security of the country first. 

“Given the scale and complexity of this situation, we’re fortunate to have proven, crisis‑tested professionals like Secretary Yellen coordinating the response. 

“This is also a reminder that banks need strong rules and rigorous supervision.  The Dodd-Frank Wall Street reform law that President Obama signed in 2010 made our banking system safer, sounder, and more resilient to shocks like this one.  A key reform was stronger capital and liquidity rules for banks with $50 billion or more in assets, including SVB and Signature Bank. 

“In 2018, Donald Trump signed a law to deregulate large banks like SVB and Signature Bank.  In opposing Trump’s decision to roll back the toughest regulatory requirements in Dodd-Frank, I warned at the time that this could create serious vulnerabilities and “may make it more difficult for regulators to spot a threat to financial stability from a larger bank while increasing competitive pressures on community banks and credit unions.”

“In the wake of this incident, Congress must undertake a very serious review of the regulatory framework for banks of similar size and risk profile to SVB.  This event revealed vulnerabilities in our financial system and demonstrates how the failure of a very large bank can cause systemic risk.  Any such bank should be required to comply with stricter rules, in order to protect American families and small businesses. 

“I urge the banking agencies to re-evaluate the Trump-era rules and step up ongoing reviews of the regulatory framework for large banks.  We need a full of accounting of what went wrong here: Was it greed, rot, mismanagement, or a combination of factors that led these banks to fail?  What steps can be taken to prevent it from happening to other banks in the future?  Did regulators effectively do their jobs?  The American people deserve answers and those responsible for these bank failures must be held accountable.

“The Federal Reserve has announced that it is conducting a review of how the agency supervised and regulated SVB.  I trust the Federal Reserve will follow the facts wherever they lead.”