After SVB Collapse, Fed’s Bowman: America’s banking sector remains resilient

In a statement published by Reuters late on Tuesday, Federal Reserve Governor Michelle Bowman dispelled rumours that the US banking industry would face difficulties in the wake of the Silicon Valley Bank (SVB) scandal.

Fed’s Bowman noted that the banking sector has strong capital and liquidity and that the Fed board is closely watching developments. To comply with the two-week ban on Fed governing body members discussing monetary policy and the economy before to the Federal Open Market Committee, the policymaker, however, made no comments on either topic.

In a similar vein, US Senate Banking Committee Chairman Sherrod Brown stated that the US Government should pass financial laws to tighten stress testing and capital and liquidity standards for banks in an interview with Bloomberg. The decision-maker also stated that the chances of taking such a step remained slim.

At its meetings on March 21 and 22, “Brown said that he hoped the Federal Reserve would not raise rates,”

Conversely, according to a person familiar with the most recent thinking among US regulators, a number of stricter capital and liquidity requirements are under consideration, along with efforts to strengthen yearly “stress tests” that gauge banks’ resilience to a fictitious recession. The measures may target companies with assets between $100 billion and $250 billion, which at the moment are exempt from some of the strictest standards.