Congress may need to consider taking away the Federal Reserve’s historic role in supervising banks, said Rep. Patrick McHenry, the chair of the House Financial Services panel on Wednesday. House Republicans are upset that the Fed is mulling raising capital requirements on medium and large banks in the wake of the collapse of Silicon Valley Bank and two other regional banks this spring. At the start of a hearing with Fed Chairman Jerome Powell, McHenry said “uncertainty from the Fed supervision and regulation is the last thing the well-capitalized banking system needs.” As a result, “it is clear that Congress may need to again examine separating supervisory and regulation out of the Fed,” he said. In the wake of the 2008 financial crisis, Congress had considered taking away the Fed’s authority to supervise banks, but lawmakers ultimately decided to give the central bank even more oversight over the sector.
Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news.