The SVB blame game is infecting Capitol Hill: Democrats and Republicans are pointing the finger at each other

Quick legislative fixes unlikely

While President Joe Biden called Monday on Congress to strengthen the rules for banks to prevent future failures, lawmakers are divided on whether any legislation is needed.

Some congressional leaders are skeptical that a closely divided Congress will act at all.

“There’s people who are going to choose bills, but I cannot imagine that, with the hold banks have on Republican members of Congress, that we can pass anything significant,” said Sen. Sherrod Brown, D-Ohio, chairman of the Senate Banking, Housing and Urban Affairs Committee.

Republicans say the laws already in place were sufficient to prevent the bank failures, if only regulators had done their job by spotting obvious problems and directing the banks to take steps that would reduce their risk.

“If there are ideas out there that people have, you know, at some point, we would be willing to entertain those, but I think it would be premature to start talking about solutions before we fully define the problem and ultimately get answers from the regulators about why they were asleep at the job,” said Sen. John Thune of South Dakota, the second-ranking Republican.

___

So what’s next?

The House Financial Services Committee has announced its first hearing for March 29, featuring at least two witnesses: Martin Gruenberg, chairman of the Federal Deposit Insurance Corp.’s board of directors, and Michael Barr, vice chair for supervision with the Federal Reserve’s board of governors. “We will conduct this hearing without fear or favor to get the answers the American people deserve,” lawmakers said.

On the Senate side, Brown said his committee will also hold a hearing soon to help lawmakers assess what went wrong. He said the first hearing is likely to focus on bringing in witnesses responsible for regulating the failed banks. The Fed board was the primary regulator for Silicon Valley Bank in California, while the FDIC was the primary federal regulator for Signature Bank in New York.

Brown spelled out some of the questions lawmakers probably will have for the regulators in a letter Thursday asking them to undertake a comprehensive review of what went wrong….