FDIC’s Hill warns versus regulative overreaction to bank closures

As policymakers prepare brand-new guidelines in reaction to the current bank failures, it is essential not to overreact and saddle the banking market with overcorrections to resolve targeted issues, FDIC Vice Chairman Travis Hill stated today throughout a conference on minority depository organizations. “What we don’t want to do is make it more difficult for institutions like MDIs and CDFIs to be able to navigate when there is stress,” he stated.

Hill was asked throughout a Q&A about his policy concerns because of the failure of Silicon Valley Bank. He stated that as banking regulators think of their approaching rulemakings, they require to bear in mind the existing environment that banks deal with. “The Fed in particular has talked about a pretty ambitious rulemaking agenda for the coming months and years, and I think this is at a time where there are still some fragilities in parts of the banking sector,” Hill stated. “We are still attempting to restore self-confidence in the market.

“I think there’s a compelling argument to at least just get through this rate-hiking cycle and see where the dust settles,” Hill included. “Once we’re through that, take a look at the lay of the land, see what lessons were learned and then, at that point, take a look at the potential proposals that we could consider and think about which ones are the most worthwhile given the conditions at the time.”


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