During an unscheduled, closed video meeting on March 24, Friday by the U.S. Treasury Department’s Financial Stability Oversight Council (FSOC), the regulators agreed that the present banking system is “silent” and “resilient” despite pressure on certain establishments. Although there is very little information on the Treasury statement, it did mention that personnel from the Federal Reserve Bank of New York presented a presentation on market trends.
The latest statement can be seen as a response to calm the current fluctuating market and the concerned depositor. The report on the meeting said that, “The Council discussed current conditions in the banking sector and noted that while some institutions have come under stress, the U.S. banking system remains sound and resilient.”
Led by Yellen, the last time the group of financial regulators met, including the heads of the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency, the Securities and Exchange Commission, and other regulatory bodies, took place on March 12. The immediate measures to backup all deposits in the two collapsed banks and establish a new Fed lending facility to increase liquidity for all banks were announced on the same day by the FDIC, Fed, and Treasury.
It was also reflected in the statement that under the jurisdiction, the functions of FSOC are “identifying risks to the financial stability of the United States; promoting market discipline; and responding to emerging threats to the stability of the U.S. financial system.” The council also talked about how member organisations track financial changes.
The FSOC meeting was held on Friday as European bank stocks fell precipitously due to concerns about global banking contagion, with Deutsche Bank and UBS particularly hard hit. Investors were concerned that regulators and central banks had not yet stopped the worst shock to the industry since the global financial crisis of 2008, which caused a sharp decline in their stock prices.
In a letter to Yellen, House Financial Services subcommittee chairs Bill Huizenga and Andy Barr said, “The events that have transpired over the last 12 days related to both Silicon Valley Bank and Signature Bank, the ensuing market instability, and your role raise a number of questions for policymakers.” The FSOC’s transparency was attacked by Barr and Huizenga, who also stated that the lack of a separate website or news releases by the FSOC blurs the line between your responsibilities as Chairman of the FSOC and as Secretary of the Treasury.
The FSOC has frequently encouraged Congress to enact laws governing cryptocurrencies, requesting that they choose which regulator would be in charge of the cryptocurrency spot market and address any regulatory loopholes. To keep safeguarding the depositors, Yellen has promised if the future sees any issues rising, the same actions taken against the two banks will be repeated.