|
Introduction
Chairman Brown, Ranking Member Scott and Members of the Committee, thank you for the opportunity to appear before the Committee today to address recent bank failures and the Federal regulatory response.
On March 10, 2023, just over two weeks ago, Silicon Valley Bank (SVB), Santa Clara, California, with $209 billion in assets at year-end 2022, was closed by the California Department of Financial Protection and Innovation (CADFPI), which appointed the FDIC as receiver. The failure of SVB, following the March 8, 2023 announcement by Silvergate Bank that it would wind down operations and voluntarily liquidate,[1] signaled the possibility of a contagion effect on other banks. On Sunday, March 12, 2023, just two days after the failure of SVB, another institution, Signature Bank, New York, New York, with $110 billion in assets at year-end 2022, was closed by the New York State Department of Financial Services (NYSDFS), which also appointed the FDIC as receiver. With other institutions experiencing stress, serious concerns arose about a broader economic spillover from these failures.
After careful analysis and deliberation, the Boards of the FDIC and the Federal Reserve voted unanimously to recommend, and the Treasury Secretary, in consultation with the President, determined that the FDIC could use emergency systemic risk authorities under the Federal Deposit Insurance Act (FDI Act)[2] to fully protect all depositors in winding down SVB and Signature Bank.[3]
[2] 12 U.S.C. § 1823 (c)(4)(G).
|
