Federal Reserve May Tighten Financial Rules After Collapse of Major Banks

Federal Reserve Chairman Jerome Powell said today that the US central bank may have to tighten its supervision of the US financial system in the wake of the collapse of three of the largest US banks this spring.

In prepared remarks delivered during a banking conference in the Spanish capital, Madrid, Powell said that tougher rules put in place after the financial crisis of 2007 and 2008 made large multinational banks more resilient to large-scale loan defaults, such as the bursting of the housing bubble led to that crisis.

But the collapse of Silicon Valley Bank, Signature Bank, and First Republic Bank revealed various vulnerabilities that the Fed is likely to address through new proposals, according to Powell.

Powell did not provide any details, but other Fed officials said banks should hold more capital in reserve to protect against loan losses.