The United States House Financial Services Committee, comprising Democrats, has initiated the introduction of multiple bills in what they refer to as the initial phase of legislation, intended to tackle the failures witnessed in prominent banks.House Democrats have endorsed 11 bills in response to the recent collapses of Silicon Valley Bank, Signature Bank, and First Republic Bank.
Representative Maxine Waters, the committee ranking member, announced on June 21 that the proposed legislation aims to impose penalties and prevent bank executives from future industry employment if they are found to have negligently contributed to their bank’s failure. These measures have yet to be reviewed and approved by the committee’s Republican members.
Representative Waters emphasized the urgency of enacting legislation to strengthen the banking system’s safety and soundness and to enhance accountability among bank executives in light of the failures of the aforementioned banks. She urged Congress not to passively observe the situation but to take proactive action in addressing these issues.
Under the leadership of Republican Patrick McHenry, the House Committee frequently addresses issues related to digital assets and supervises federal regulatory bodies like the Securities and Exchange Commission. While certain legislators have attributed the collapses of Signature and Silicon Valley Bank to digital assets, representative Waters’ proposed legislation does not explicitly mention cryptocurrencies or blockchain.
Additionally, when introducing the bills, she did not refer to Silvergate Bank, known for its crypto-friendly approach, which announced its voluntary liquidation in March.
The proposed bills also encompass additional provisions that would grant regulators the power to restrict bank executives from selling stock in specific situations, similar to the circumstances surrounding Silicon Valley Bank. Moreover, the bills propose an expansion of stress testing requirements for banks, as mandated by regulators. Additionally, one of the bills recommends limitations on bonus payments to bank executives.
Representative Waters acknowledged that committee republicans showed a willingness to consider certain legislation during the markup. However, it remains uncertain which bills have the potential to gain bipartisan backing.
In her previous statements, Waters emphasized the need for collaboration between government agencies and lawmakers to effectively regulate cryptocurrencies. She expressed optimism that a stablecoin bill could successfully pass the committee, and a discussion draft of the bill was reviewed during a hearing on digital assets held on June 13th.