Senate Banking Committee Discusses Accountability, Oversight of Financial Regulators in Tuesday Hearing

Last updated:
Author
Author
Julia Smith
About Author

Julia is an experienced editor with a passion for covering a wide variety of beats. She loves all things politics and regularly covers regulatory updates on emerging technology here for Crypto News.

Last updated:
Why Trust Cryptonews
Cryptonews has covered the cryptocurrency industry topics since 2017, aiming to provide informative insights to our readers. Our journalists and analysts have extensive experience in market analysis and blockchain technologies. We strive to maintain high editorial standards, focusing on factual accuracy and balanced reporting across all areas - from cryptocurrencies and blockchain projects to industry events, products, and technological developments. Our ongoing presence in the industry reflects our commitment to delivering relevant information in the evolving world of digital assets. Read more about Cryptonews

The Senate Committee on Banking, Houses, and Urban Affairs met on November 14th to conduct a hearing regarding oversight of financial regulators.

Holding executives accountable

“We must turn the lessons of this year into action,” said Senator Sherrod Brown (D – OH), Chairman of the U.S. Senate Committee on Banking, Housing, and Urban Affairs. “It means improving bank supervisions, it means holding bank executives accountable for risky behavior that does in fact sometimes drive their banks into the ground.”

Witnesses included Vice Chair for Supervision at the Federal Reserve, Michael Barr, Chair of the Federal Deposit Insurance Corporation, Martin Gruenberg, Chair of the National Credit Union Administration, Todd Harper, and Acting Comptroller at the Office of the Comptroller of the Currency, Michael Hsu.

“Congress must finish the job and pass our bipartisan RECOUP Act,” Brown said, referencing the Recovering Executive Compensation Obtained from Unaccountable Practices Act (RECOUP) presented by the committee earlier this year with the aim “to hold senior bank execs accountable when they gamble with customers money.”

Algorithmic lending’s “unintended consequences”

The Senate hearing comes nearly two weeks after FTX founder, Sam Bankman-Fried, was found guilty in Manhattan federal court on seven charges including wire fraud, conspiracy to commit securities fraud, and conspiracy to commit money laundering.

The attention surrounding Bankman-Fried’s case has put a spotlight on the lack of regulation within the crypto sphere, with Bankman-Fried using a faulty automated risk engine to algorithmically liquidate risky positions on the exchange.

In his testimony today, Federal Deposit Insurance Corporation (FDIC) Chair Martin Gruenberg made note of “unintended consequences” produced by algorithmic lending activity, claiming that it “is the subject of supervisory attention in the course of our examination process.”

“I think it’s a growing issue and one we need to pay attention to,” Gruenberg said. 

“A new kind of liquidity risk”

Moreover, the hearing acknowledged concerns regarding the March 2023 collapse of Silicon Valley Bank, Signature Bank, and Silvergate Bank, of which FTX was a customer.

“We learned how large depositors can withdraw those deposits at the push of a button and we’ve also seen how social media can amplify concerns about institutions very quickly,” said Gruenberg. “I do think in a sense it’s a new kind of liquidity risk that both the banks and the regulators need to pay attention to.”

The committee will conduct its annual banking oversight hearing on December 6th, 2023, with eight CEOs of the nation’s largest banks, including JP Morgan Chase, Bank of America, Citigroup, and Morgan Stanley, among others participating. 

More Articles

DeFi News
Ethereum Foundation Allocates $120 Million of ETH to DeFi Protocols
Jimmy Aki
Jimmy Aki
2025-02-13 19:54:47
Blockchain News
Customs Hold Bitmain Equipment, Disrupting U.S. Bitcoin Mining Supply Chains
Hongji Feng
Hongji Feng
2025-02-13 18:53:47
Crypto News in numbers
editors
Authors List + 66 More
2M+
Active Monthly Users Around the World
250+
Guides and Reviews Articles
8
Years on the Market
70
International Team Authors