The administration of President Joe Biden will require the US Federal Reserve to tighten regulations for mid-sized banks with assets ranging from $100 billion to $250 billion. According to The Wall Street Journal, the move will involve stricter capital and liquidity requirements for these financial institutions. The Federal Reserve may also increase stress tests to evaluate banks’ abilities to withstand market downturns. Additionally, the Biden administration might consider further expanding deposit insurance, with the Federal Deposit Insurance Corporation expected to report on potential policy changes in this area by May 1.
Sources say that advisors to the Biden administration have been hesitant to take action for fear of criticism for helping the wealthy. In early March, the Federal Deposit Insurance Corporation announced the bankruptcy of Silicon Valley Bank – the 16th largest bank in the US by assets, and the largest to go bankrupt in the last 15 years. In the same month, New York regulators closed Signature Bank due to systemic risks.