The Fed calls for greater regulation and supervision for banks

On March 10, California’s Silicon Valley Bank (SVB) collapsed, a fall followed by the bankruptcy of another regional US lender and the pressured merger of Swiss investment banking giant Credit Suisse with regional rival UBS.

“These developments suggest the need to strengthen our supervision and regulation of institutions the size of Silicon Valley Bank,” Powell said.

When SVB failed, it became clear that some regulatory assumptions “were wrong,” the Fed chair said, particularly about what a bank collapse looks like.

“What used to look like a bank run was people queuing at an ATM,” but what happened at SVB “was not related to ATMs, it was people on their phones (…) capable of moving money very quickly,” he said. .

“That has to be reflected in our regulation as well as our supervision,” he added.