Mr. Barr also said he is looking "to improve the speed, force and agility of supervision."
The Fed's report on the collapse of SVB, released April 28, found that supervisors "did not fully appreciate the extent of the vulnerabilities as SVB was growing in size and complexity," Mr. Barr said. "When supervisors did identify vulnerabilities, they did not take sufficient steps to ensure that the bank fixed those problems quickly enough."
Rep. Ann Wagner, R-Mo., who chairs the Capital Markets Subcommittee, asked Mr. Barr what prevented the Fed from escalating its supervisory actions against SVB.
Mr. Barr responded that the Fed's report found "supervisors were essentially too timid (and) too slow to raise those standards in a timely enough way."
Ms. Wagner contended that "these failures could have been prevented if our regulators acted more forcefully with bank management to mitigate risk." She was one of several GOP committee members who blamed regulators for recent events.
"Driven by the economic mismanagement of this administration, inflation is the underlying cause of the volatility we're experiencing now," said House Financial Services Committee Chairman Patrick McHenry, R-N.C., in his opening statement.
The committee's top Democrat, however, blamed the bank failures on Trump-era banking regulation, as others in the party have done previously.
"A toxic combination of Trump-era deregulation and mismanagement by irresponsible bank executives and board members caused the recent bank failures," said the committee's ranking member Maxine Waters, D-Calif.
The Economic Growth, Regulatory Relief and Consumer Protection Act, also known as S. 2155, passed in 2018 with bipartisan support and rolled back bank policies originally enacted after the Great Recession, which created restrictions for banks with more than $50 billion in assets, such as annual stress tests conducted by the Fed. The legislation raised the threshold for such restrictions to apply only to banks with more than $250 billion in assets, along with other changes.
Vice Chairman French Hill, R-Ark., pushed back against Ms. Waters' claim, saying the legislation played no role in the recent bank failures.
At a Bipartisan Policy Center event last month, Federal Deposit Insurance Corp. Vice Chairman Travis Hill said the same, instead maintaining that "mismanagement of interest rate risk was at the core of SVB's problem."
