Remarks by FDIC Vice Chairman at the Cato Institute on “Insights on the FDIC’s Agenda”
WASHINGTON – Today, Federal Deposit Insurance Corporation (FDIC) Vice Chairman Travis Hill addressed the Cato Institute in Washington, DC, offering insights on the FDIC’s regulatory agenda:
“It has been about six months since the high-profile failure of Silicon Valley Bank (SVB), and the brief banking turmoil that followed. Since then, banking conditions have stabilized but remain somewhat fragile. In the second quarter, deposits decreased for a fifth consecutive quarter, but outflows have moderated following record-setting declines earlier this year. Net interest margin declined for a second straight quarter, but by less than expected, as banks continue to pay more for deposits and competition for funding remains strong. For example, money market fund assets continue to set all-time highs at the same time that total bank deposits continue to fall, further pressuring deposit rates.
“Overall, industry conditions are encouraging, but significant uncertainty remains. High rates may persist and continue to pressure the industry, and if rates do fall, the cause might be that an economic downturn — along with deteriorating credit quality — has finally arrived.
“Meanwhile, the banking agencies are in the midst of an aggressive regulatory agenda – including both a number of items that were under consideration before March and a number under consideration in response to March. While I think some response to the bank failures is warranted, I worry that an overreaction is underway, and that we are moving too quickly to impose a long list of new rules and expectations at a time when conditions remain precarious on the FDIC’s regulatory agenda.”
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