U.S. House Financial Services chair urges confidence, says financial agencies acting within law

WASHINGTON (Reuters) -The House Financial Services Committee chairman on Tuesday urged confidence in the nation’s banking system, saying the Federal Reserve and the Federal Deposit Insurance Corporation are acting within the law after the collapse of two U.S. banks raised concerns about the banking sector and roiled world markets.

“The Fed is doing what the Fed is supposed to do. The FDIC is doing what the FDIC is supposed to do in conformance with the law,” Representative Patrick McHenry told CNBC, adding Americans should “have confidence in their financial system.”

He also said he spoke with FDIC Chairman martin Gruenberg Monday night and was assured that the financial regulator “is ready, willing and able to take any willing and capable buyer” of failed banks.

In a separate interview with Punchbowl News, McHenry said he would request documents and hold a hearing following the weekend collapse of Silicon Valley Bank and Signature Bank (NASDAQ:), which continued to weigh on investors on Tuesday.

McHenry did not say when the panel would meet or what specific documentation lawmakers would seek, but said he wanted to hear from both the banks and regulators.

“You have the decisions of the institution, and you have decisions of the supervisors,” the Republican committee chairman told Punchbowl late on Monday after briefing Republicans on the matter. “One is a management failure. The other is supervisory failure. And we’re going to look into those things.”

U.S. President Joe Biden has sought to soothe the markets, issuing a statement on Sunday and making public remarks on Monday morning before U.S. markets opened that sought to reassure Americans that banks and deposits were safe.

His administration stepped in over the weekend to shore up the banks, with the FDIC taking over receivership.

McHenry backed the response, saying officials “acted swiftly and boldly.”

“They currently have the tools, and they’ve used them appropriately to resolve two banks,” McHenry told Punchbowl, adding that he supported “bold action … if it is in the interest of the financial system and in the interest of the American people.”

Biden also vowed new bank rules after regulations enacted after the 2008 financial crisis were rolled back under former Republican President Donald Trump.

Any legislation would have to pass both the Senate, controlled by Biden’s fellow Democrats, and the Republican-led House before Biden could sign it into law.

The panel’s ranking Democrat, Maxine Waters (NYSE:), on Monday urged bipartisan work to ensure the stability of the financial system.