STATEMENT: Gottheimer Statement Pushing for House Bipartisan Investigation into Financial Regulators’ Failure to Properly Oversee Silicon Valley Bank

Mar 16, 2023
Press

WASHINGTON, D.C. — Today, March 16, 2023, U.S. Congressman Josh Gottheimer (NJ-5), a member of the House Financial Services Committee, released the following statement:

“I am calling on House Financial Services Committee Chairman McHenry and Ranking Member Waters to conduct a comprehensive bipartisan investigation into financial regulators’ failure to properly oversee Silicon Valley Bank (SVB).

Under current U.S. law, the Federal Reserve has had the tools to identify many of the conditions that led to SVB’s collapse. In addition to clear oversight failures, the Federal Reserve did not apply basic safety and soundness standards nor heightened standards that could have been used to sound the alarm at SVB. The Federal Reserve could have applied more rigorous standards, allowed for in existing law, including annual stress tests and capital requirements accounting for unrealized gains and losses. For some reason, which we must understand, it chose not to. This enhanced supervision may have flagged SVB’s perilous asset mix, including its significant holdings of long-term treasuries. 

Now, we must make sure banking regulators are using their power to appropriately protect depositors at other institutions, and to deter runs on small, medium, and regional banks nationwide that do not suffer from the same management failures that plagued SVB. The failures of SVB’s management cannot cause a crisis of confidence in our banking system. In 2008, we had banks that were “too big to fail.” Today, we cannot encourage a system where banks are “too small to survive” and big banks are more concentrated.

It is concerning that the risk management failures of SVB did not catch the attention of state and federal regulators during routine examinations. Regulators failed to identify significant risk management issues at SVB that should have received scrutiny during the bank’s rapid growth. A high percentage of uninsured deposits, a significant mismatch in duration between assets and liabilities, a lack of client diversity, and the bank’s lack of a permanent Chief Risk Officer for nearly eight months should have been clear indications for banking regulators to take action.

We need to learn why the federal and state officials did not step in sooner, and instead let SVB grow rapidly while bank management made egregious failures to manage what should have been obvious risks.

The Federal Reserve is now conducting a review of its oversight of SVB, this action is too little, too late. Congress and federal regulators must take steps to backstop depositors, prevent contagion, and ensure proper oversight of our financial system to assure depositors at well-managed institutions that their funds are secure. We cannot end up in a situation where Americans only have access to the biggest banks.”

###

Recent Posts


May 29, 2024
Press

RELEASE: Gottheimer Demands Transparency and Action from USPS Leadership Regarding Lafayette Post Office

Above: Gottheimer calling on USPS to reestablish its post office in Lafayette. LAFAYETTE, NJ — Yesterday, May 28, 2024, U.S. Congressman Josh Gottheimer (NJ-5) called on United States Postal Service leadership to uphold its pledge to reestablish a post office in Lafayette, New Jersey, five years after they suspended operations. Since USPS’s 2019 decision to close […]



May 28, 2024
Press

RELEASE: Gottheimer Announces New Federally-Backed Grant Program for Broadband in Sussex County

Below: Gottheimer announcing new federal investments for broadband. NEWTON, NJ — Today, May 28, 2024, U.S. Congressman Josh Gottheimer (NJ-5) announced new federal investment secured for New Jersey to ensure that every family has access to high- quality, high-speed, affordable internet. The new $50 million federal investment will be made available through the New Jersey Broadband […]



May 27, 2024
Press

PHOTO RELEASE: Gottheimer Honors Memorial Day & America’s Fallen Heroes at Bergenfield Parade

Above: Gottheimer marching in the Bergenfield Memorial Day Parade. BERGENFIELD, NJ — Today, May 27, 2024, U.S. Congressman Josh Gottheimer (NJ-5) marched in the Bergenfield Memorial Day Parade to honor all those who made the ultimate sacrifice for our great country while serving in our nation’s military. Below: Gottheimer honoring Memorial Day today in Bergenfield. ###