Senators press Fed on SVB failures, accountability and Basel III; Powell cites process changes
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Summary
Lawmakers pressed the Fed over supervision shortcomings tied to Silicon Valley Bank's collapse, asked about staff accountability and raised concerns about Basel III capital rules and planned stress‑test changes. Jerome Powell said supervisors have revised the 'playbook' and that the Fed will work with other agencies to finalize Basel III endgame.
Senators questioned Federal Reserve Chair Jerome H. Powell about supervisory shortcomings tied to the failure of Silicon Valley Bank (SVB), the broader question of accountability for supervisors, and ongoing Basel III and stress‑test rulemaking.
Several senators pressed why no Fed supervisors had been disciplined after SVB's collapse. Senator Tim Scott said the regulators had "30 MRAs and MRIAs that never had timely action at SVB" and asked why no one faced consequences. Powell said the events at SVB were not primarily malfeasance but the result of a failed playbook and insufficient focus on basic banking risks: "a lot of focus on process and on governance and controls and not enough focus on basic bread and butter banking, credit risk, liquidity risk, interest rate risk." He added supervisors have taken substantial steps and that lessons were learned.
On Basel III, senators urged caution that any new capital rules not put U.S. banks at a competitive disadvantage. Powell said the Fed remains committed to completing the Basel III endgame in coordination with the OCC and FDIC once leadership there is in place and that the goal is a compliant, internationally consistent approach. On stress testing, senators criticized proposals they said would hand more modeling information to large banks; Powell said the agency is updating practices and seeking resilience in light of administrative‑law developments.
Powell described concrete internal changes: revising supervisory focus, learning from the bank run at SVB, and smoothing stress‑test volatility by averaging results and increasing transparency on models and scenarios. Senators said oversight and potential personnel accountability will remain areas of committee scrutiny.