Bank crackdown takes shape

By Zachary Warmbrodt

Top Federal Reserve and FDIC officials are beginning to preview what the post-SVB banking rulebook will look like. Here’s what we know: Michael Barr, the Fed’s vice chair for supervision, will tell senators at a hearing on SVB’s collapse this morning that officials need to “enhance” bank stress testing, consider stronger liquidity requirements and explore “other reforms” to help make the financial system more resilient. Barr’s comments matter because he’s the Fed’s pointman on bank regulation. He’s leading the Fed’s review of what went wrong at SVB, and Fed Chair Jerome Powell has pledged to support Barr’s recommendations….Even if Republicans continue to complain at this week’s Senate and House SVB hearings, it will be easier for regulators to brush off.
“Although there will be continuing GOP pressure to ease pending capital revisions, the banking agencies will toughen the rules they now target knowing that crises dull Congress to fears about macroeconomic impact,” Federal Financial Analytics managing partner Karen Petrou told MM. “There will surely be some macroeconomic impact, not to mention continuing transformation of banking to shadow banking,” she added. “But the agencies will do what they want and mostly what they’ll want is to look tough.”