Tester Calls for Independent Probe of Bank Failures, Goes to Bat for Montana Community Banks During Hearing
In bipartisan letter, Tester calls on Biden to appoint independent investigator to probe recent bank failures;
Senator to federal regulators: “My concern is that these community banks that don’t have a risky portfolio will end up paying the price”
As part of his continued push to hold bank executives and federal regulators accountable for recent bank failures, U.S. Senator Jon Tester today called on President Biden to appoint an independent investigator and urged officials to make sure community banks don’t pay the price for inept management and lackluster oversight during a Senate Banking Committee hearing.
Tester emphasized that an independent probe is critical to ensure that risky bank executives and ineffective regulators are not let off the hook for their role in these failures.
“This morning the good Senator for North Carolina, Senator Tillis, and I are calling for an independent, comprehensive investigation into the recent bank failures. The stress these recent failures put on our financial system is having negative effects on community financial institutions, small business, and hardworking families, and I believe we must get to the bottom of the recent failures to ensure our financial system isn’t left on the hook for risky behavior by reckless executives and lackluster agency oversight.”
Tester then pressed federal regulators to support his call for an independent probe, asking: “This is a question for all of you and you can nod or raise your hand. Would all of you support an independent review?” Federal regulators unanimously supported Tester’s call for an independent probe.
Additionally, Tester emphasized that rural communities like Montana rely on community banks to access capital and that it would be a mistake to overregulate these community banks in response to inept bank executives’ poor management and ineffective federal oversight.
“I come from a rural state. You know this, I mean, I don’t need to tell you guys… And we don’t have, there ain’t a lot of banks every other block. It ain’t like walking down the street in LA or New York City. And my concern is that these community banks that don’t have a risky portfolio will end up paying the price for a CEO who by the way told this committee a couple of days ago that they took care of all the problems, and you just pointed out that they had 31 of them that they didn’t. So how do you protect the folks who are doing an honest job, providing capital, supporting agriculture, supporting main street businesses, supporting working families? How do you protect those? Because in 2008, I stood up here along with [Senator] Brown and others and we railed on regulators, we railed and railed and railed because they didn’t do their job. And you know what they ended up doing? They end up regulating the hell out of the [community] banking industry to the point where we made the bigger banks bigger… I just wanna make sure that doesn’t bleed down.”
Tester has led the charge to ensure bank executives and federal regulators are held accountable for recent bank failures.
On Thursday, Tester and Sen. Thom Tillis (R-N.C.) sent a bipartisan letter pressing President Biden to appoint an independent investigator to further probe the relevant factors that lead to the recent collapse of Silicon Valley Bank, Signature Bank, and First Republic Bank.
Tester has also led a letter to the Securities and Exchange Commission (SEC) calling for an investigation into Bank executives’ stock sales ahead of the collapse, sent a letter to FDIC Chairman Martin J. Gruenberg and Federal Reserve Chairman Jerome H. Powell urging federal financial regulators to use every tool at their disposal to claw back reported bonuses received by bank executives, and has repeatedly pressed officials on their failure to “drop the hammer” on bank management.
You can read Tester’s full letter calling for an independent investigation HERE.