The Government Accountability Office’s Director of Financial Markets and Community Investment Michael Clements will testify during a House subcommittee hearing on oversight of the recent failures of Silicon Valley Bank and Signature Bank. Watch live.

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On September 15, 2021, the US House of Representatives’ Subcommittee on Oversight and Investigations held a hearing on the oversight of Silicon Valley Bank (SVB) and Signature Bank failures. The hearing was aimed at examining the failures of these banks and the regulatory response to those failures.

Signature Bank, a New York-based bank, and SVB, a California-based bank, have been accused of facilitating fraudulent activity by their clients. Specifically, the banks are alleged to have provided financial services to companies involved in wire fraud, cryptocurrency fraud, and other financial crimes.

During the hearing, the subcommittee heard from several witnesses, including representatives from the Department of Justice, the Federal Bureau of Investigation, and the Office of the Comptroller of the Currency. The witnesses outlined the regulatory failures that allowed these banks to continue facilitating fraudulent activity.

One of the key criticisms was the lack of communication between the various regulatory agencies. The witnesses noted that the banks had been investigated by multiple agencies, but these agencies had failed to share information with one another. As a result, the banks were able to continue operating, even though they were clearly engaged in fraudulent activity.

Another issue that was raised was the lack of enforcement by the regulatory agencies. SVB and Signature Bank had both been the subject of multiple regulatory actions, including fines and cease and desist orders. However, these actions had not effectively stopped the banks from facilitating fraudulent activity.

The subcommittee also heard from victims of the frauds facilitated by these banks. They spoke about the devastating impact that the fraud had on their lives and businesses.

Overall, the hearing highlighted the need for stronger regulation and enforcement of financial institutions. SVB and Signature Bank failures are indicative of a broader problem in the financial industry, where some institutions are willing to facilitate criminal activity in exchange for profits.

The regulatory agencies must work together to share information and coordinate their efforts to identify and punish these bad actors. Additionally, fines and cease and desist orders must be supplemented with more severe penalties, such as revoking banking licenses, to serve as a deterrent to other financial institutions.

In conclusion, the oversight hearing on Silicon Valley Bank and Signature Bank failures is a productive step towards addressing the systemic issues in the financial industry. Through collaboration and cooperation, we can hold financial institutions accountable for their actions and protect consumers and businesses from fraudulent activity.