Both the Senate Banking Committee and the House Financial Services Committee have announced hearings on the banking troubles which were started with the collapse of Silicon Valley Bank (SVB).  The Senate kicks off the sessions next Tuesday, March 28, and the House is the next day.

Both hearings are currently scheduled to have the same panel of witnesses: Martin Gruenberg, Chair of the FDIC, Michael Barr, Fed Vice Chair for Supervision, and Nellie Liang, Under Secretary of Treasury for Domestic Finance. These types of hearings always pose some degree of headline risk.

At his press conference after the FOMC meeting, Fed Chair Powell made clear that Vice Chair Barr has broad discretion to look into the problems of SVB and other institutions that needed help.  Powell said that some of the problems at SVB had been identified by regulators, but there was no explanation of why stronger action wasn’t taken.  This will obviously be a focus of next week’s hearings.

Fed

The Fed was generally expected to raise rates by 25bps at this week’s FOMC meeting.  Putting this in context, it was just ten days ago that Chair Powell testified before the House and Senate with a very hawkish message and put a 50bps increase on the table.  More importantly, the Committee made a very deliberate change in the post-meeting press release substituting the words “may” and “some” to replace “ongoing” in describing future rate policy. With both the statement and the Chair’s comments, a pause is now clearly on the table.

The FOMC minutes should make for interesting reading when they are released next month. Powell was able to deliver a unanimous vote, but clearly, there was discussion at the meeting on future rates decisions that led to the new wording in the FOMC statement.  The minutes may give some insight as to the thinking that went into the new wording.

Disclosures (show)

Stay up to date with the latest articles and business updates. Subscribe to our newsletter

Articles Read 1/2

🎁 Unlock 1 extra article by joining our Community!

Stay up to date with the latest articles. You’ll even get special recommendations weekly.

Already have an account? Sign In

Don't Miss Out
First Month Free