Elizabeth Warren Calls for Investigation of SVB and Signature Bank Collapses

Senator says bank regulators should provide preliminary results in 30 days

Sen. Elizabeth Warren (D., Mass.) called for an independent investigation into the recent failures of two U.S. regional banks, Silicon Valley Bank and Signature Bank.

In a letter Sunday to the inspectors general of the Treasury Department, the Federal Deposit Insurance Corp. and the Federal Reserve, Ms. Warren called for the probe to examine the management and oversight of the banks ahead of their collapses this month. She said preliminary results from the investigation should be provided within 30 days.

“The bank’s executives, who took unnecessary risks or failed to hedge against entirely foreseeable threats, must be held accountable for these failures. But this mismanagement was allowed to occur because of a series of failures by lawmakers and regulators,” said Ms. Warren, who sits on the Senate Banking Committee.

Many lawmakers have said they want more information about the decisions and actions of the lenders’ executives and the bank examiners before considering new legislation. The collapse of SVB and Signature and the turbulence in the U.S. banking industry that followed have spurred regulators to examine the causes of the failures and oversight of midsize lenders.

Ms. Warren was one the harshest critics of Wall Street during the 2008 financial crisis and the government’s response. She hasn’t softened her stance since becoming a senator in 2013. She lambasted the 2018 relaxation of regulations created by the Dodd-Frank Act and criticized Democrats who voted for it.

She blamed that rollback, which raised the threshold at which banks face tighter oversight to $250 billion in assets from $50 billion, for the collapse of SVB and Signature. Ms. Warren and Rep. Katie Porter (D., Calif.) last week proposed legislation that would reverse the change.

“We need to go back and take that provision that we passed in 2018, and just roll it back out and say no, the Fed doesn’t get that ability to just go to sleep when they have ultimate supervisory responsibilities over these multibillion-dollar banks,” Ms. Warren said Sunday on NBC’s “Meet the Press.”

President Biden on Friday urged Congress to expand the authority of federal regulators to hold accountable the bank executives considered responsible for the collapse of financial institutions. The president is considering additional regulatory and legislative recommendations.

The Federal Reserve, SVB’s primary federal regulator, is examining the lender’s failure and is rethinking a number of its rules for midsize banks that have escaped the brunt of the regulator’s toughest requirements.

House Financial Services Committee Chairman Patrick McHenry (R., N.C.) and ranking member Maxine Waters (D., Calif.) said Friday they would hold a hearing March 29 into the failures. FDIC Chairman Martin Gruenberg and Michael Barr, the Fed’s vice chairman for supervision, are scheduled to testify.

Separate probes at the Justice Department and the Securities and Exchange Commission into the collapse of SVB are continuing.