Fed Reportedly Mulling Tougher Rules For Midsize Banks After SVB Crash

The Federal Reserve is reportedly mulling tougher rules and oversight for midsize banks that are similar in size to the collapsed Silicon Valley Bank.

A review of the bank’s failure being conducted by Fed Vice Chair for Supervision Michael Barr could pave the way for strengthened rules on banks in the $100 billion to $250 billion range, reported Reuters, citing a source.

The review will be released by May 1 and augments a review of bank capital rules by Barr that is already underway, the report added.

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At present, the most stringent capital and liquidity requirements are set aside for the country's largest banks, after a 2018 deregulation law from Congress and Fed rule-making under earlier leadership eased those rules for smaller companies, the report said.

All those requirements could be reworked by the central bank in the wake of the ongoing banking crisis which has also sparked fresh calls from proponents of tougher rules.

Fifty Democratic lawmakers, including Senator Elizabeth Warren (D-Mass.), on Tuesday, introduced a bill to repeal the law that eased rules for banks in 2018, the report said.

Price Action: Bank stocks witnessed some revival on Tuesday as fears of a potential contagion eased. Shares of Western Alliance Bancorporation WAL closed 14.36% higher on Tuesday while First Republic Bank FRC gained 26.98%. KeyCorp KEY shares closed 6.94% higher.

Meanwhile, the U.S. Justice Department and the Securities and Exchange Commission are probing the collapse of the Silicon Valley Bank, according to a report by The Wall Street Journal that cited people familiar with the matter.

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