Scott Statement on Fed, FDIC Bank Failure Reports
Washington, D.C. – Senator Tim Scott (R-S.C.), Ranking Member of the Senate Committee on Banking, Housing, and Urban Affairs, today released the following statement after the Federal Reserve and Federal Deposit Insurance Corporation (FDIC) issued their reports on the failures of Silicon Valley Bank (SVB) and Signature Bank:
“Since we first learned of SVB and Signature Bank’s downfalls, I’ve said this was a failure in three parts – a failure of bank management, a failure of state and federal regulators, and a failure of the Biden administration to control inflation driving rapid interest rate hikes.
“The reports affirm that bank executives and supervisors failed, but they attempt to deflect blame by falsely using those failures as a scapegoat to argue for additional authorities and a rollback of the tailoring provisions that were passed in 2018. There’s a clear failure in supervisory culture, especially when we consider that the regulators failed to use all the tools at their disposal to address these problems.
“We’ve repeatedly heard from Secretary Yellen, Vice Chair for Supervision Barr, and Chairman Gruenberg that our banks are well-capitalized, our banking system is resilient, and these failed banks were unique outliers. If that is the case, we should not be punishing the many well-run financial institutions and the American public for these unique bank and supervisory failures.
“We need accountability across the board, not only for the American taxpayer but also for the continued health of our financial system. This Committee’s role is one of oversight, and I look forward to reviewing these reports in full and bringing these regulators back before the Committee to answer for their findings.”
The Government Accountability Office (GAO) also issued its own report today on the bank failures this morning. In their preliminary review, GAO found that “In the 5 years prior to 2023, regulators identified concerns with Silicon Valley Bank and Signature Bank, but both banks were slow to mitigate the problems the regulators identified and regulators did not escalate supervisory actions in time to prevent the failures.”
Ranking Member Scott has maintained his stance that the outcome of Silicon Valley Bank and Signature Bank were a result of mismanagement by bank executives, a failure of regulators to execute their supervisory role, and rising interest rates caused by the Biden administration’s spending policies.
- March 13, 2023: Tim Scott joins Trey Gowdy to discuss fallout from SVB
- “We have failure at the Fed, failure at the regulators, and failure with the management of that bank.”
- March 14, 2023: Tim Scott joins Dana Perino to discuss SVB's failure
- “The bank failed for three specific reasons. Number one, the bank executives failed on their responsibilities. They bet on low interest rates while the Fed was increasing interest [rates] faster than any other time in the last three or four decades.”
- March 15, 2023: Tim Scott calls for answers on bank mismanagement
- "The more we learn about these two banks and their mismanagement, the clearer it becomes that we need answers. The Committee needs to take action and get to the bottom of this. The Biden regulators were asleep at the wheel and they need to explain how they missed these so-called 'idiosyncrasies.'"
- March 16, 2023: Tim Scott addresses SVB’s mismanagement at first hearing since collapse
- “There is no question that the failure should be seen through the three prisms. One, is the failure of the bank executives and the board. They were betting on interest rates going down when there was a clear sign from the Fed that interest rates were going up – not one time, not two times, not four times, not six times, but eight increases. And the bank management and the board sat there, idly by, doing nothing. That is a travesty and has had a devastating impact on our financial systems.”
- March 20, 2023: Tim Scott, Patrick McHenry demand answers on bank failures
- “Our oversight responsibilities to the American people require that we evaluate the root causes of these bank failures as well as the failures of U.S. regulatory agencies to prevent these collapses from occurring. These responsibilities include obtaining full information about what appears to be glaring bank mismanagement, fundamental lack of prudence in bank risk and balance sheet management, and regulators’ lack of basic supervision and enforcement of safety and soundness rules, regulations, and principles.”
- March 23, 2023: Tim Scott, Sherrod Brown call on bank CEOs to testify
- “As the CEO of SVB at the time of its collapse, your testimony on the bank’s corporate governance, risk management, rapid growth, and client industry and sector concentration, as well as the overwhelming proportion of uninsured depositors and the payment of bonuses in the hours leading up to the seizure of the bank by regulators, would address several important matters the Committee needs to understand."
- March 28, 2023: Tim Scott criticizes bank mismanagement at SVB hearing on supervisory failures
- “By all accounts, this is a classic tale of negligence, and it started with the banks themselves. Without any question, that’s where the buck stops. So, it is imperative that we hear straight from the horse’s mouth, so to speak, to find out why these banks were so poorly managed and so poorly managed [their] risks... three things remain clear to me regarding SVB. First, the bank was rife with mismanagement. Second, there was a clear supervisory failure. Our regulators were simply asleep at the wheel. And finally, President Biden’s reckless spending caused [this] 40-year high in inflation, and the country, as well as the bank, experienced tremendous loss.”
- March 30, 2023: Tim Scott responds to Biden's "Fact Sheet" on bank turmoil
- “Here are the real facts. The bank executives at these banks failed to manage their risk, the regulators failed to supervise these banks, and the Biden administration failed to stop its reckless spending and curb inflation. The regulators had the tools to supervise these banks, but they were asleep at the wheel.”
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