Members of Congress urge U.S. financial regulators and Treasury Department to act swiftly after Silicon Valley Bank collapse

WASHINGTON, D.C. — A group of Members of Congress Sunday wrote to Treasury Secretary Janet Yellen, Federal Reserve Chair Jerome Powell, FDIC Chair Martin J. Gruenberg, and Acting Comptroller of the Currency Michael J. Hsu, urging immediate action to protect depositors and prevent runs on banks following the Silicon Valley Bank collapse.

The bipartisan group of members recommended that:

• The FDIC should prioritize finding a buyer for Silicon Valley Bank to provide a seamless transition for the bank’s depositors and borrowers, with the hope of making the depositors whole.
• The Treasury Department should encourage banks of all sizes that have relationships with Silicon Valley Bank’s depositors to extend temporary lines of credit to the bank’s depositors to assist with essential costs, like payroll.
• The Federal Reserve should offer liquidity through repurchase agreements. These will allow banks to access short-term financing to meet potential withdrawals using long-term U.S. Treasuries and mortgage-backed securities as collateral. This will assure depositors that banks have adequate resources to allow them swift access to their funds.
• To provide greater certainty for depositors at other insured depository institutions, Congress and federal regulators should rapidly consider increasing the Federal Deposit Insurance Corporation (FDIC) limit on deposit insurance above the current $250,000 limit.
• Federal financial regulators should consider additional oversight measures to ensure that a bank’s asset mix can adequately provide liquidity during a stress event.

The signatory list of Members includes Reps. Gottheimer (NJ-5), Beatty (OH-3), Harder (CA-9), Costa (CA-21), Peters (CA-50), Gonzalez (TX-34), Trone (MD-6), Moskowitz (FL-23), Nickel (NC-13), Pettersen (CO-7), Stevens (MI-11), Houlahan (PA-6), Meeks (NY-5), Horsford (NV-4), Craig (MN-2), Cuellar (TX-28), Krishnamoorthi (IL-8), and Scholten (MI-3).

“Right now, we are concerned about the depositors at SVB, and at banks across the country suddenly unnerved by Silicon Valley Bank’s catastrophic failure that unfolded in only forty-eight hours. If Americans can’t trust that their basic deposits are safe, we could suddenly face runs at banks of all sizes across the country. In the 2008 financial crisis, banks were ‘too big to fail.’ We cannot encourage a system where banks are too ‘small to succeed,'” the Members of Congress wrote in a letter to U.S. regulators and the Treasury Department. “Additional steps need to be taken to give confidence to depositors and discourage them from fleeing to only the largest banks. Unjustified runs on healthy regional banks would be highly damaging to our economy, threaten our national security, and create enhanced long-term risks.”