U.S. Treasury Secretary Janet Yellen mentioned Thursday that banking regulation and supervisory guidelines have to be re-examined within the wake of the Silicon Valley Bank and Signature Bank failures to make sure that they handle present banking system dangers.
In remarks ready for supply to the National Association for Business Economics, Yellen additionally known as for stronger regulation of the rising non-bank, or “shadow bank,” sector.
Yellen mentioned {that a} 2018 roll-back of financial institution capital necessities and stronger supervision for smaller and mid-size banks with belongings under $250 billion needs to be re-examined.
“Any time a bank fails, it is a cause for serious concern. Regulatory requirements have been loosened in recent years. I believe it is appropriate to assess the impact of these deregulatory decisions and take any necessary actions in response.”
She mentioned that regulatory reforms put in place after the 2008 disaster have helped the U.S. monetary system climate shocks, together with the COVID-19 pandemic.
“But the failures of two regional banks this month demonstrate that our business is unfinished,” Yellen mentioned, including that the monetary system was considerably stronger than it was 15 years in the past.
“This is perhaps best illustrated by the fact that we’ve seen relative stability in the overall banking sector this month, even as concerns grew about specific institutions,” she mentioned.
But Yellen mentioned it was vital that U.S. regulatory authorities look at whether or not the present supervisory and regulatory regimes “are adequate for the risks that banks face today. We must act to address these risks if necessary.”
Yellen repeated feedback final week that the Treasury, Federal Reserve and FDIC had been ready to once more use the identical instruments they used to guard depositors within the SVB and Signature failures.
“And we would be prepared to take additional actions if warranted,” she added, with out specifying steps that may very well be taken.
Source: www.dailysabah.com
