Congressman Sean Casten | Congressman Sean Casten Official U.S. House Headshot
Congressman Sean Casten | Congressman Sean Casten Official U.S. House Headshot
Washington, D.C. — U.S. Congressman Sean Casten (IL-06) introduced the Chief Risk Officer Enforcement and Accountability Act, legislation to codify Federal Reserve rules requiring that large banks have a Chief Risk Officer and increase notification requirements and public transparency when the position is vacant.
“It was a clear mistake for Silicon Valley Bank to be without a Chief Risk Officer during a critical nine-month period preceding its collapse, particularly for a bank that held a high percentage of uninsured deposits in historically less stable industries,” said Rep. Sean Casten. “We need to prevent future banks from making the same errors. The Chief Risk Officer Enforcement and Accountability Act would rectify this by requiring banks with $50 billion or more in assets to retain a Chief Risk Officer and notify their regulator if the position becomes vacant.”
Following the collapse of Silicon Valley Bank (SVB) in March 2023, a report by the Federal Reserve (Fed) found that, among other things, a key factor that contributed to, and likely expedited, SVB’s failure was the lack of a Chief Risk Officer from April 2022 to January 2023. SVB’s lack of a CRO violated Fed regulations during this time, but Fed supervisors unfortunately decided not to issue a violation as SVB was actively searching for a replacement.
The Chief Risk Officer Enforcement and Accountability Act would codify Federal Reserve (Fed) rules requiring that large banks have a Chief Risk Officer (CRO), require a large bank to notify their regulator within 24 hours upon the CRO position becoming vacant, and provide a plan to fill the position within 60 days. If the bank fails to fill the position within the required timeline, they would be subject to a cap on asset growth until a qualified CRO is hired. Lastly, to protect investors, this bill would require the bank to notify the public that the CRO position is vacant after 60 days.
Text of the Chief Risk Officer Enforcement and Accountability Act can be found here.
Original source can be found here.
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