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    A Big Question for the Fed: What Went Wrong With Bank Oversight?

    As the Federal Reserve reviews the failure of Silicon Valley Bank, and Congress prepares for hearings, bank oversight is getting a closer look.WASHINGTON — Jerome H. Powell is likely to face more than the typical questions about the Federal Reserve’s latest interest rate decision on Wednesday. The central bank chair will almost certainly be grilled about how and why his institution failed to stop problems at Silicon Valley Bank before it was too late.The collapse of Silicon Valley Bank, the largest bank failure since 2008, has prompted intense scrutiny of the Fed’s oversight as many wonder why the bank’s vulnerabilities were not promptly fixed.Many of the bank’s weaknesses seem, in hindsight, as if they should have been obvious to its regulators at the Fed. An outsize share of its deposits were over the $250,000 insurance limit, making depositors more likely to flee at the first sign of trouble and leaving the bank susceptible to runs.The bank had also grown rapidly, and its depositors were heavily concentrated in the volatile technology industry. It held a lot of long-term bonds, which lose market value when the Fed raises interest rates, as it has over the past year. Still, the bank had done little to protect itself against an increase in borrowing costs.Governors at the Fed Board in Washington allowed the bank to merge with a small bank in June 2021, after the first warning signs had surfaced and just months before Fed supervisors in San Francisco began to issue a volley of warnings about the company’s poor risk management. In 2022, the Fed repeatedly flagged problems to executives and barred the firm from growing through acquisition.But the Fed did not react decisively enough to prevent the bank’s problems from leading to its demise, a failure that has sent destabilizing jitters through the rest of the American financial system.Mr. Powell is likely to face several questions: What went wrong? Did examiners at the Federal Reserve Bank of San Francisco fail to flag risks aggressively enough? Did the Fed’s board fail to follow up on noted weaknesses? Or was the lapse indicative of a broader problem — that is, did existing rules and oversight make it difficult to quickly address important flaws?Some Democrats have blamed regulatory rollbacks put into effect by the Fed in 2019 for weakening the system, and have pointed a finger at Mr. Powell.Julia Nikhinson for The New York TimesThe Fed has already announced a review of the bank’s collapse, with the inquiry set to conclude by May 1.“The events surrounding Silicon Valley Bank demand a thorough, transparent and swift review by the Federal Reserve,” Mr. Powell said in a statement last week.Congress is also planning to dig into what went awry, with committees in both the Senate and House planning hearings next week on the recent bank collapses.Investors and experts in financial regulation have been racing to figure out what went wrong even before the conclusion of those inquiries. Silicon Valley Bank had a business model that made it unusually vulnerable to a wave of rapid withdrawals. Even so, if its demise is evidence of a blind spot in how banks are overseen, then weaknesses could be more broadly spread throughout the banking system.“The SVB failure has not only gotten people asking the question, ‘Gee, are other banks in similar enough circumstances that they could be in danger?’” said Daniel Tarullo, a former Fed governor who oversaw post-2008 regulation and who is now a professor at Harvard. “It’s also been a wake-up call to look at banks generally.”Politicians have already begun assigning blame. Some Democrats have blasted regulatory rollbacks passed in 2018, and put into effect by the Fed in 2019, for weakening the system, and they have pointed a finger at Mr. Powell for failing to stop them.At the same time, a few Republicans have tried to lay the blame firmly with the San Francisco Fed, arguing that the blowup shouldn’t necessarily lead to more onerous regulation.“There’s a lot, obviously, that we don’t know yet,” said Lev Menand, who studies money and banking at Columbia Law School.Understanding what happened at Silicon Valley Bank requires understanding how bank oversight works — and particularly how it has evolved since the late 2010s.Different American regulators oversee different banks, but the Federal Reserve has jurisdiction over large bank holding companies, state member banks, foreign banks operating in the United States and some regional banks.The Fed’s Board of Governors, which is made up of seven politically appointed officials, is responsible for shaping regulations and setting out the basic rules that govern bank supervision. But day-to-day monitoring of banks is carried out by supervisors at the Fed’s 12 regional banks.President Barack Obama with, to his left, Sen. Christopher Dodd and Representative Barney Frank in 2010, after signing the Dodd-Frank financial reform act.Doug Mills/The New York TimesBefore the 2008 financial crisis, those quasi-private regional branches had a lot of discretion when it came to bank oversight. But in the wake of that meltdown, the supervision came to be run more centrally out of Washington. The Dodd-Frank law carved out a new role for one of the Fed’s governors — vice chair for bank supervision — giving the central bank’s examiners around the country a more clear-cut and formal boss.The idea was to make bank oversight both stricter and more fail-safe. Dodd-Frank also ramped up capital and liquidity requirements, forcing many banks to police their risk and keep easy-to-tap money on hand, and it instituted regular stress tests that served as health checkups for the biggest banks.But by the time the Fed’s first official vice chair for supervision was confirmed in 2017, the regulatory pendulum had swung back in the opposite direction. Randal K. Quarles, a pick by President Donald J. Trump, came into office pledging to pare back bank rules that many Republicans, in particular, deemed too onerous.“After the first wave of reform, and with the benefit of experience and reflection, some refinements will undoubtedly be in order,” Mr. Quarles said at his confirmation hearing.Some of those refinements came straight from Congress. In 2018, Republicans and many Democrats passed a law that lightened regulations on small banks. But the law did more than just relieve community banks. It also lifted the floor at which many strict bank rules kicked in, to $250 billion in assets.Mr. Quarles pushed the relief even further. For instance, banks with between $250 billion and $700 billion in assets were allowed to opt out of counting unrealized losses — the change in the market value of older bonds — from their capital calculations. While that would not have mattered in SVB’s case, given that the bank was beneath the $250 billion threshold, some Fed officials at the time warned that it and other changes could leave the banking system more vulnerable.Lael Brainard, who was then a Fed governor and now directs the National Economic Council, warned in a dissent that “distress of even noncomplex large banking organizations generally manifests first in liquidity stress and quickly transmits contagion through the financial system.”Randal K. Quarles, who was picked by President Donald J. Trump and started at the Fed in 2017, came into office pledging to pare back bank rules that were by then deemed too onerous.Tom Williams/CQ Roll Call, via Associated PressOther Fed officials, including Mr. Powell, voted for the changes.It is unclear how much any of the adjustments mattered in the case of Silicon Valley Bank. The bank most likely would have faced a stress test earlier had those changes not gone into place. Still, those annual assessments have rarely tested for the interest rate risks that undid the firm.Some have cited another of Mr. Quarles’s changes as potentially more consequential: He tried to make everyday bank supervision more predictable, leaving less of it up to individual examiners.While Mr. Quarles has said he failed to change supervision much, people both within and outside the Fed system have suggested that his mere shift in emphasis may have mattered.“That ethos might have been why supervisors felt like they couldn’t do more here,” said Peter Conti-Brown, an expert in financial regulation and a Fed historian at the University of Pennsylvania.Mr. Quarles, who stepped down from his position in October 2021, pushed back on the contention that he had made changes to supervision that allowed weaknesses to grow at Silicon Valley Bank.“I gave up the reins as vice chair for supervision a year and a half ago,” he said.Fed supervisors began to flag Silicon Valley Bank’s problems in earnest in the fall of 2021, after the bank had grown and faced a more extensive review. That process resulted in six citations, often called “matters requiring attention,” which are meant to spur executives to act. Additional deficiencies were identified in early 2023, shortly before the failure.A critical question, said Mr. Menand, is “were the supervisors content to spot problems and wait for them to be remediated?”But he noted that when it came to “bringing out the big guns” — backing up stern warnings with legal enforcement — supervisors must, in many ways, rely on the Fed Board in Washington. If bank leadership thought the Board was unlikely to react to their deficiencies, it might have made them less keen to fix the problems.Banks often have issues flagged by their supervisors, and those concerns are not always immediately resolved. In a rating system that tests for capital planning, liquidity risk management and governance and controls, consistently only about half of large banking institutions score as “satisfactory” across all three.But in the wake of Silicon Valley Bank’s collapse, how bank oversight is performed at the Fed could be in for some changes. Michael Barr, who President Biden appointed as the Fed’s vice chair for supervision, was carrying out a “holistic review” of bank oversight even before the failures. Either that or the review of what happened at SVB is now more likely to end in tighter controls, particularly at large regional banks.“There’s a lot of buck-passing,” said Mr. Conti-Brown. “I think it was likely a joint failure, and that’s part of the design of the system.” More

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    U.S. Is Ready to Protect Smaller Banks if Necessary, Yellen Says

    The Treasury secretary pledged that the Biden administration would take additional steps as needed to support the banking system.Treasury Secretary Janet L. Yellen said pressures on the nation’s banking system were “stabilizing” in remarks to the American Bankers Association.Pete Marovich for The New York TimesWASHINGTON — Treasury Secretary Janet L. Yellen expressed confidence in the nation’s banks on Tuesday but said she was prepared to take additional action to safeguard smaller financial institutions as the Biden administration and federal regulators worked to contain fallout from fears over the stability of the banking system.Ms. Yellen, seeking to calm nerves as the U.S. financial system faces its worst turmoil in more than a decade, said the steps the administration and federal regulators had taken so far had helped restore confidence. But policymakers were focused on making sure that the broader banking system remained secure, she said.“Our intervention was necessary to protect the broader U.S. banking system,” Ms. Yellen said in remarks before the American Bankers Association, the industry’s leading lobbying group. “And similar actions could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion.”She added: “The situation is stabilizing. And the U.S. banking system remains sound.”However, Ms. Yellen also underscored the gravity of the current situation. She said the stresses to the banking system, while not as dire as the 2008 financial meltdown, still constituted a “crisis” and pointed to the risk of bank runs spreading.“This is different than 2008; 2008 was a solvency crisis,” Ms. Yellen said. “Rather what we’re seeing are contagious bank runs.”In response to a question from Rob Nichols, the chief executive of the American Bankers Association, Ms. Yellen said she did not want to “speculate” about what regulatory changes might be necessary to prevent a similar situation from recurring.“There’s time to evaluate whether some adjustments are necessary in supervision and regulation to address the root causes of the crisis,” she said. “What I’m focused on is stabilizing our system and restoring the confidence of depositors.”She spoke as government officials contemplated additional options to stem the flow of deposits out of small and medium-size banks, and as concerns grew that more would need to be done.Ms. Yellen said recent federal actions after the failure of Silicon Valley Bank and Signature Bank this month were intended to show that the Biden administration was dedicated to protecting the integrity of the system and ensuring that deposits were secure.In the past 10 days, federal regulators have used an emergency measure to guarantee the deposits of Silicon Valley Bank and Signature Bank, initiated a new Federal Reserve program to make sure other banks can secure funds to meet the needs of their depositors and coordinated with 11 big banks that deposited $30 billion into First Republic, a wobbly regional bank..css-1v2n82w{max-width:600px;width:calc(100% – 40px);margin-top:20px;margin-bottom:25px;height:auto;margin-left:auto;margin-right:auto;font-family:nyt-franklin;color:var(–color-content-secondary,#363636);}@media only screen and (max-width:480px){.css-1v2n82w{margin-left:20px;margin-right:20px;}}@media only screen and (min-width:1024px){.css-1v2n82w{width:600px;}}.css-161d8zr{width:40px;margin-bottom:18px;text-align:left;margin-left:0;color:var(–color-content-primary,#121212);border:1px solid var(–color-content-primary,#121212);}@media only screen and (max-width:480px){.css-161d8zr{width:30px;margin-bottom:15px;}}.css-tjtq43{line-height:25px;}@media only screen and (max-width:480px){.css-tjtq43{line-height:24px;}}.css-x1k33h{font-family:nyt-cheltenham;font-size:19px;font-weight:700;line-height:25px;}.css-1hvpcve{font-size:17px;font-weight:300;line-height:25px;}.css-1hvpcve em{font-style:italic;}.css-1hvpcve strong{font-weight:bold;}.css-1hvpcve a{font-weight:500;color:var(–color-content-secondary,#363636);}.css-1c013uz{margin-top:18px;margin-bottom:22px;}@media only screen and (max-width:480px){.css-1c013uz{font-size:14px;margin-top:15px;margin-bottom:20px;}}.css-1c013uz a{color:var(–color-signal-editorial,#326891);-webkit-text-decoration:underline;text-decoration:underline;font-weight:500;font-size:16px;}@media only screen and (max-width:480px){.css-1c013uz a{font-size:13px;}}.css-1c013uz a:hover{-webkit-text-decoration:none;text-decoration:none;}How Times reporters cover politics. We rely on our journalists to be independent observers. So while Times staff members may vote, they are not allowed to endorse or campaign for candidates or political causes. This includes participating in marches or rallies in support of a movement or giving money to, or raising money for, any political candidate or election cause.Learn more about our process.“The situation demanded a swift response,” Ms. Yellen said. “In the days that followed, the federal government delivered just that: decisive and forceful actions to strengthen public confidence in the U.S. banking system and protect the American economy.”Despite those efforts, the Fed’s campaign to raise interest rates to tame inflation has exposed weaknesses in the balance sheets of regional banks, rattling investors and raising fears that deposits are not safe.Ms. Yellen said the financial system was far stronger than it was 15 years ago but also called for an examination of how the recent bank failures occurred.“In the coming weeks, it will be vital for us to get a full accounting of exactly what happened in these bank failures,” she said. “We will need to re-examine our current regulatory and supervisory regimes and consider whether they are appropriate for the risks that banks face today.”The Federal Reserve, which is the primary regulator for banks, is undertaking a review of what happened with Silicon Valley Bank as well as looking more broadly at supervision and regulation.The uncertainty about regional banks has also led to concerns that the industry will further consolidate among big banks.Ms. Yellen made clear on Tuesday that banks of all sizes are important, highlighting how smaller banks have close ties to communities and bring competition to the system.“Large banks play an important role in our economy, but so do small and midsized banks,” she said. “These banks are heavily engaged in traditional banking services that provide vital credit and financial support to families and small businesses.”The Treasury secretary added that the fortunes of the U.S. banking system and its economy were inextricably tied.“You should rest assured that we will remain vigilant,” she said. 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    Biden Warns That Climate Change Could Upend Federal Spending Programs

    A chapter in the new Economic Report of the President focuses on the growing risks to people and businesses from rising temperatures, and the government’s role in adapting to them.WASHINGTON — The Biden administration warned on Monday that a warming planet posed severe economic challenges for the United States, which would require the federal government to reassess its spending priorities and how it influenced behavior.Administration economists, in an annual report, said that reassessment should include a new look at the climate-adaptation implications of aid to farmers, wildland firefighting and wide swaths of safety-net programs like Medicaid and Medicare, as the government seeks to shield the poorest Americans from suffering the worst effects of climate change.The White House Council of Economic Advisers also warned that, left unchanged, federal policies like fighting forest fires and subsidizing crop insurance for farmers could continue to encourage Americans to live and work in areas at high risk of damage from warming temperatures and extreme weather — effectively forcing taxpayers across the country to pay for increasingly costly choices by people and businesses.The findings were contained in a chapter of the annual Economic Report of the President, which was released on Monday afternoon and this year focused on long-run challenges to the U.S. economy. They came on a day when the Intergovernmental Panel on Climate Change, a body of experts convened by the United Nations, reported that Earth was barreling quickly toward a level of warming that would make it significantly more difficult for humans to manage drought, heat waves and other climate-related disasters.The White House report details evidence showing the United States is more vulnerable to the costs of extreme weather events than previously thought, while suggesting a series of policy shifts to ensure the poorest Americans do not foot the bill.“Climate change is here,” Cecilia Rouse, the departing chair of the Council of Economic Advisers, said in an interview. “And as we move forward, we’re going to have to be adapting to it and ensuring that we minimize the cost to families and businesses and others.”The report broadly suggests that climate change has upended the concept of risk in all corners of the American economy, distorting markets in ways that companies, people and policymakers have not fully kept up with. It also suggests that the federal government will be left with significantly higher costs in the future if it does not better identify those risks and correct those market distortions — like paying more to provide health care for victims of heat stroke or to rebuild coastal homes flooded in hurricanes.State and local officials, not the federal government, have authority where development happens, so people keep building in high-risk areas, a classic example of what economists call a moral hazard.Johnny Milano for The New York TimesFor example, the report cites evidence that private mortgage lenders are already offloading loans with a high exposure of climate risk to federally backed Fannie Mae and Freddie Mac. It highlights how the federal flood insurance program, which essentially underwrites all home flooding insurance policies in the country, is at risk of insolvency.At a time when administration officials and the Federal Reserve are struggling to stabilize the nation’s financial system, the report warns that home buyers and corporate investors appear to be underestimating climate-related risks in their markets, which could lead to a financial crisis.“Rapid changes in asset prices or reassessments of the risks in response to a shifting climate could produce volatility and cascading instability in financial markets if not anticipated by regulators,” the report says..css-1v2n82w{max-width:600px;width:calc(100% – 40px);margin-top:20px;margin-bottom:25px;height:auto;margin-left:auto;margin-right:auto;font-family:nyt-franklin;color:var(–color-content-secondary,#363636);}@media only screen and (max-width:480px){.css-1v2n82w{margin-left:20px;margin-right:20px;}}@media only screen and (min-width:1024px){.css-1v2n82w{width:600px;}}.css-161d8zr{width:40px;margin-bottom:18px;text-align:left;margin-left:0;color:var(–color-content-primary,#121212);border:1px solid var(–color-content-primary,#121212);}@media only screen and (max-width:480px){.css-161d8zr{width:30px;margin-bottom:15px;}}.css-tjtq43{line-height:25px;}@media only screen and (max-width:480px){.css-tjtq43{line-height:24px;}}.css-x1k33h{font-family:nyt-cheltenham;font-size:19px;font-weight:700;line-height:25px;}.css-1hvpcve{font-size:17px;font-weight:300;line-height:25px;}.css-1hvpcve em{font-style:italic;}.css-1hvpcve strong{font-weight:bold;}.css-1hvpcve a{font-weight:500;color:var(–color-content-secondary,#363636);}.css-1c013uz{margin-top:18px;margin-bottom:22px;}@media only screen and (max-width:480px){.css-1c013uz{font-size:14px;margin-top:15px;margin-bottom:20px;}}.css-1c013uz a{color:var(–color-signal-editorial,#326891);-webkit-text-decoration:underline;text-decoration:underline;font-weight:500;font-size:16px;}@media only screen and (max-width:480px){.css-1c013uz a{font-size:13px;}}.css-1c013uz a:hover{-webkit-text-decoration:none;text-decoration:none;}How Times reporters cover politics. We rely on our journalists to be independent observers. So while Times staff members may vote, they are not allowed to endorse or campaign for candidates or political causes. This includes participating in marches or rallies in support of a movement or giving money to, or raising money for, any political candidate or election cause.Learn more about our process.To address those dangers, the report offers components for a federal climate adaptation strategy. Its recommendations — some of them already in early stages through existing administration actions — include producing better information about climate risk, helping financial markets accurately price that risk and better protecting the most vulnerable from the effects of climate change.Perhaps the most significant proposal, and probably the most politically sensitive, is a call for Washington to exert more pressure on state and local officials, pushing them to be careful about where and how they let people build homes, businesses and infrastructure projects.That proposal would address a core problem that has hindered America’s efforts to adapt to climate change. When people build in places that are most exposed to the effects of climate change — along coastlines, near riverbanks, at the edge of forests prone to wildfires — state and local governments get most of the benefits, in the form of higher tax revenues and economic growth. But when flooding, fires or other major disasters happen, the federal government typically pays the bulk of the cost for responding and rebuilding.Yet for the most part, state and local officials, not the federal government, have authority over where and how development happens — so people keep building in high-risk areas, a classic example of what economists, including the authors of the report, call a moral hazard.In response, the document proposes using federal funds to change the behavior of state and local officials, by tying that money to state and local decisions. That approach has been tried before, with little success. In 2016, the Obama administration suggested adjusting the level of disaster aid provided to states, based on what steps they took to reduce their exposure to disasters. States objected, and the change never happened.Subsidizing crop insurance for farmers could continue to encourage Americans to work in areas at high risk of damage from warming temperatures and extreme weather, the Biden administration will warn.Mark Abramson for The New York TimesAdministration officials said they were already trying to leverage some spending from the infrastructure law President Biden signed in 2021 to influence state and local behavior. The report suggests much more aggressive action could be necessary.It also proposes a rethinking of the nation’s system of insuring against disasters — moving away from separate localized policies that cover fire, flooding and other events, and more toward a nationally mandated “multiperil catastrophe insurance” system that is backstopped by the federal government.Perhaps most sobering for Washington’s current fiscal moment — when Mr. Biden is battling with House Republicans who are seeking sharp cuts to federal spending and raising anew concerns over the growing national debt — is the report’s suggestion that climate effects could subject growing numbers of Americans to heat stroke, respiratory illnesses and other ailments in the years to come. That could further drive up government costs for health programs like Medicare and Medicaid.The Council of Economic Advisers has begun a yearslong effort to project those climate-related effects on future federal budgets, which it detailed in a highly technical paper released this month.The report released on Monday also included chapters on the economics of child care, higher education, digital assets and more.In reviewing Mr. Biden’s economic record, White House economists dived deep into the issue that has bedeviled the recovery on his watch: persistently high inflation. The report lists several explanations for why price growth has surprised administration and outside economists over the last two years but never settles on a primary driver. It does concede that pandemic relief spending under Mr. Biden and President Donald J. Trump may have played a role, by helping Americans save more than usual — and then begin to spend that extra savings.“If the drawdown of excess savings, with current income, boosted aggregate demand, it could have contributed to high inflation in 2021 and 2022,” the report says. More

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    The Children of the Iraq War Have Grown Up, but Some Wounds Don’t Heal

    BAGHDAD — The thump of a car bomb explosion, then a whoosh of flame interrupting homework; the low boom of a roadside bomb and seconds later the shattering of glass jolting families awake; an apartment door being kicked open in the middle of the night and someone shouting in a foreign language; the pop, pop, pop of bullets whizzing past in a firefight and the bang of doors slamming as grown-ups drag children inside.For six years, during the war launched by the United States in 2003 and the sectarian conflict it gave birth to, this was the soundtrack of life in Iraq, and especially for those under age 26 — about 23 million people, nearly half of the population. Trauma was a daily event. Losses touched nearly every family.Now, especially in Baghdad, many young people want to move on. The cities have somewhat recovered from the war years, and more affluent young Iraqis frequent coffee shops, go to malls and attend live concerts. Even so, most conversations keep circling back to a relative who was killed, family members who were displaced or lingering doubts about Iraq’s future.Wars leave scars even when people survive with their bodies intact. The metallic whirring of helicopters, the flash of flares, the smell of burning after bombs, the taste of fear, the ache of something lost — all of these linger long after the fighting stops.“The war took away our childhood,” said Noor Nabih, 26, whose mother was wounded in crossfire from a passing American convoy and then seriously injured again in a bomb blast.Joao Silva, a New York Times photographer, and Alissa J. Rubin, a senior correspondent, recently talked to young Iraqis in Baghdad about their lives, their thoughts on the American invasion and the state of their country. Here are some of their stories.Mohammed Hassan Jawad Jassim, 25, at his home in Baghdad. He was blinded during protests in 2019.‘I was so scared I lay down on the ground.’Mohammed Hassan Jawad Jassim, 25Mohammed was 5 at the time of the invasion. Every explosion startled him. The first time he saw an American vehicle hit a roadside bomb, he said, the blast vibrated through him; then came a barrage of bullets.“I was so scared I lay down on the ground and pressed my face into the road,” he recalled.Before long, the U.S. soldiers began to knock at the family’s door in search of Shiite Muslim militia members loyal to the anti-American cleric Muqtada al Sadr. “I was afraid they were going to shoot,” he said.Mohammed with his mother.Family photos of Mohammed, before and after his injuries.Mohammed with his wife and children in Baghdad.With 17 sisters and brothers, and a father who could barely piece together a living working in a garage, Mohammed could not focus at school, and dropped out after second grade. “I had thoughts of death,” he said. “Sometimes I tied a blindfold around my eyes and sat in a dark room.”When he was 21, his daughter, Tabarak, was born and he wanted to get a government job but had no connections to politicians who could help him. Indignant, he joined the 2019 youth protests over government corruption and the Iranian presence in Iraq, known in the Arab world as the October Revolution.On his first day at the protests, a tear-gas canister exploded in his face, pulling one eye out its socket and damaging the other. His world went dark.Now his daughter is 4; he also has a 1-year old son, Adam.“My only wish is that I could have my eyesight so that I could see my children,” he said. “Adam came into the world after I was hit, so I have never seen him.Fadia Khalil Ibrahim Paulus Alo, 24, during rehearsal at the Baghdad Music and Ballet School.‘When I play, I forget where I am.’Fadi Khalil Ibrahim Paulus Alo, 26, and his sister, Fadia Khalil Ibrahim Paulus Alo, 24Throughout the war, Fadi and his sister, Fadia, found solace in the Baghdad Music and Ballet School.Many of their fellow Christians had fled Iraq, and the smell of smoke filled their lungs as they studied. American soldiers kept barging into their family’s fifth-floor apartment in search of insurgents, only to stop in their tracks when they saw the portrait of Jesus in prayer over the television.But the music school was a refuge for the siblings, a world of harmonies instead of explosions.“When I play, I forget where I am,” said Fadi, a computer auditor at the Central Bank of Iraq, as well as a flutist in the Iraqi National Orchestra.But when the notes fade, he wonders whether he can really spend the rest of his life in Iraq.Fadi at home with his family in Baghdad.Fadia in a gym in Baghdad.Fadi and Fadia at their church in Baghdad, the site of a 2010 attack by Al Qaeda that targeted worshipers at prayer. More than 100 people were taken hostage, and 52 were killed.Fadia is now a marketing agent for an Iraqi electronic payment system and a violist in the orchestra. When she was 12, a car bomb exploded at a municipal court next door to the school. She recalled the eerie silence right afterward and then screaming.After checking on her brother, she fetched a first-aid bag; bandaged the leg of the principal, which had been sliced by shrapnel; and helped first graders who had been cut by glass and shrapnel. “The children were so scared, so I knew what I had to do,” she said.“It was strange to be so calm when everyone was screaming and crying, but it came from God,” she said.Fadia loves the theme music from the film “LaLa Land” and Smetana dances. Unlike her brother, she sees her future in Iraq.“I am attached to this place,” she said. “When I am here, I feel at home.”Dalia Mazin Sedeeq Al-Hatim and Hussain Sarmad Kadhim Al-Bayati at their wedding reception.‘It was all beautiful until Hussain was shot.’Dalia Mazin Sedeeq Al-Hatim, 24; Hussain Sarmad Kadhim Al-Bayati, 26Dalia, 24, and Hussain, 26, met at the hospital where they were both pharmacists. It took Hussain just a month to know he wanted to marry Dalia and for Dalia to feel the same about Hussain.They had much in common. Both were from families that prized education; both had grown up with the sounds of war. Dalia remembered watching the Nickelodeon cartoon channel when bombs began to fall on Baghdad; Hussain remembered windows being blown out from a bomb blast.And both their families fled to Syria when the war came too close to home. Dalia’s school bus driver disappeared during the sectarian fighting and was later found dead, and the same happened to Hussain’s brother’s school bus driver.Dalia is a Sunni Muslim and Hussain is a Shia Muslim.Both newlyweds grew up with the sounds of war.Dalia and Hussain, both pharmacists, at her mother’s pharmacy in Baghdad.Their one difference — Dalia is a Sunni Muslim and Hussain is a Shia Muslim — did not matter to them, although they knew it might to others. “Even if our sect could be an obstacle, we agreed that it wouldn’t be,” Hussain said.“On the day I proposed to Dalia, my father insisted that I tell Dalia’s family that I am a Shia so it is clear and Dalia’s family won’t be surprised someday,” he said. “They said: ‘We do not care what sect you are. We care that you love our daughter and she loves you.’”Even before their Feb. 18 wedding day, the violence that is part of daily life touched them. Hussain was stabbed and shot during a robbery while working the night shift at a pharmacy.“It was all beautiful until Hussain was shot and now we were once again reminded of the reality of Baghdad,” Dalia said.They hope now, Hussain said, “for health and safety.”Sulaiman Fayadh Sulaiman has been paralyzed from the waist down since he was shot as a 3-year-old in 2003.‘I cannot see much of a future.’Sulaiman Fayadh Sulaiman, 22Sulaiman was 3 years old in August 2003, and having an early breakfast with his father in their family’s garden when, he recalled, “five bullets came to our house, four hit the wall and different parts of the house, and one hit me.”The bullet went through his abdominal wall and passed into his spine, paralyzing him from the waist down. Then, as he was being treated at a spinal injury hospital, a huge truck bomb targeting the United Nations headquarters next door badly damaged the hospital and buried him in rubble.Months later, his father brought him to the gate of an American base, hoping to find aid for the boy, since his initial injuries were caused by a skirmish with U.S. soldiers. A soldier told his father that he would bring Sulaiman to the United States for treatment, and that he “would send me back able to walk again.”Sulaiman arriving for archery practice at Al-Shaab stadium in Baghdad.Sulaiman at archery practice.Sulaiman at his home in Baghdad.But when they returned to the base, he said, “the soldiers at the gate said the soldier who was going to take me had been transferred two days before.”Years later the disappointment is still traced upon his face.Since then, Sulaiman has found flashes of joy as a member of the Iraqi Paralympic archery team, competing internationally. For brief moments, he said, as he holds his bow, fits his arrow and pulls the string, he can smile. But the happiness fades quickly.“I cannot see much of a future,” he said.Lt. Hamza Amer Chamis, center right, inspecting troops at the Baghdad Joint Command headquarters.‘To make my father be proud of me in the hereafter.’Hamza Amer Chamis, 24Hamza, 24, grew up with the military in his blood. His father had been a colonel when Saddam Hussein was in power, and rejoined the Iraqi Army, which the Americans initially dissolved, after it was reconstituted. He bonded with the American soldiers he worked with, rising to the rank of general.“My dream, my passion for becoming an officer, started at the age of 12,” Hamza recalled. “Our school had a costume party, and my father gave me his uniform with his rank and colors to wear. It was a great thing, and the next day I told him, ‘I want to become like you.’”But the family was seen as traitors by some of his father’s former army colleagues who had joined the insurgents fighting the American military. One group of militants tried to kidnap Hamza’s older brother. Then, in 2014, Hamza’s father was killed as he was fighting in Anbar against the country’s newest scourge, the Islamic State.Hamza at a checkpoint in Baghdad.Hamza helping his mother, Entisar, make coffee for guests at their family home in Baghdad.Hamza with his son and wife at home in Baghdad.From then on, he said, he wanted “to make my father be proud of me in the hereafter and feel that I did something for him, just as he raised and supported me.”Hamza graduated at the top of his class in military college and became the youngest lieutenant in the history of the post-2003 Iraqi Army. His first mission: to fight the remnants of the Islamic State, the same militants who killed his father.Now he is an officer in charge of security for the Joint Command, which includes the senior staff of the Iraq Armed Forces. His dream is to reach the same rank as his father.Noor Nabih with her son.‘I still have fear inside me.’Noor Nabih, 26Soft voiced and restrained, Noor recited her experiences of life after the invasion.She is a Sunni Muslim, from the religiously mixed area around Samarra about two hours north of Iraq’s capital, and at first the fighting did not touch her. But in 2005, she said, “we began to hear the sounds of gunfire and explosions.”“We knew it was the Americans, because the news was everywhere that this was an American war,” she recalled.Soon after, the family moved to Baghdad. But back in Samarra, her fathers’ four brothers were kidnapped by anti-American Sunni insurgents. The youngest, the one Noor was closest to, “was shot many times, his body was left by a rubbish heap.” Then the insurgents torched her grandfather’s house.Grocery shopping in Baghdad.Noor with her husband, Mustafa.“I do not feel safe in Iraq, period and if I have a chance to leave this country I will,” Noor said.When Noor was 11, the family returned to Samarra to put flowers on her uncle’s grave. As they drove, a firefight between U.S. troops and insurgents forced them to take a detour. A stray bullet flew through a window, hitting her mother in her side. They believed it came from the U.S. troops because of its caliber.   Her father instructed her to stop the bleeding with tissues, she said, but the blood soaked through. “I felt I had lost everything,” she said.Her mother survived, and the family fled to Syria for a time. Then, soon after they returned to Iraq, a bomb attached to the underside of her parents’ car by unknown people left her mother with a traumatic brain injury.“I do not feel safe in Iraq, period, and if I have a chance to leave this country I will,” Noor said. “I still have fear inside me every day, despite all my attempts to forget what I have seen.”Falih Hassan More

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    Fed Meets as Bank Chaos Collides With Inflation

    The Federal Reserve will decide whether and by how much to raise interest rates this week at a moment when its path ahead is newly fraught.The Federal Reserve entered 2023 focused on a central goal: wrestling down the rapid inflation that has plagued American consumers since 2021. But over the past two weeks, that job has become a lot more complicated.Many economists expect central bankers to raise interest rates a quarter-point, to just above 4.75 percent, on Wednesday, continuing their fight against rapid price increases. A range of investors and analysts had expected the Fed to make an even bigger rate move until a series of high-profile bank closures and government rescues raised concerns about both the economic outlook and financial stability.On Sunday, the Fed pumped up its program that keeps dollar financing flowing around the world, its second move in a week to shore up the financial system. The previous Sunday, it unveiled an emergency lending program meant to serve as a relief valve for banks that need to raise cash.Jerome H. Powell, the Fed chair, and his colleagues must now decide how to react to bank turmoil when it comes to interest rate policy, which guides the speed of the economy. And they must do so quickly. In addition to announcing a rate decision this week, Fed officials will also release a set of quarterly economic projections that will indicate how high they expect borrowing costs to climb this year. Central bankers had expected to lift them to roughly 5 percent in 2023 and, before the market volatility, had hinted that they might adjust that anticipated peak even higher in their new projections.But now, Fed officials will have to make their next move against a backdrop of banking system instability. They could try to balance the risk of lasting inflation against the risk of causing financial turmoil — raising rates more slowly and stopping earlier to avoid fueling more tumult. Or they could try to separate their inflation fight from the financial stability question altogether. Under that scenario, when it came to setting the level of interest rates, the Fed would pay attention to banking problems only inasmuch as they seemed likely to slow down the real economy.That’s the approach the European Central Bank took last week, when it followed through with plans to raise rates by half a point even as one of Europe’s biggest banks, Credit Suisse, was swept up in the market mayhem.The range of possibilities make this the most uncertain central bank gathering in years: During Mr. Powell’s tenure, officials have mostly hinted at what they are going to do with interest rates ahead of their meeting so that they do not catch financial markets by surprise and prompt a bigger-than-warranted reaction with their policy adjustment. But there is little clarity as this week begins. Investors were putting 60 percent odds on a quarter-point increase and 40 percent odds on no move at all.Some Wall Street economists thought the Fed would hit pause, and at least one or two anticipated an outright rate cut in response to the upheaval, though many expected a quarter-point increase.“You lose time on the fight against inflation if you wait,” said Michael Feroli, the chief U.S. economist at J.P. Morgan. Still, Mr. Feroli had expected the Fed to raise its forecast for how high it would nudge rates this year, and he now expects them to leave their peak rate estimate unchanged at about 5 percent.The bout of banking unrest is likely to weigh on the economy, meaning that the central bank itself does not need to do as much to restrain economic growth. Torsten Slok, the chief economist at Apollo, estimated that tightening lending standards and other fallout from the past week was roughly equivalent to a 1.5 percentage point increase in the Fed’s main policy rate.“In other words, over the past week, monetary conditions have tightened to a degree where the risks of a sharper slowdown in the economy have increased,” Mr. Slok wrote in an analysis over the weekend.But it is unclear how long any pullback in banks’ willingness to lend money will last, or if it will stabilize or worsen. Given the vast uncertainty, Diane Swonk, the chief economist at KPMG, said officials might scrap their economic projections altogether, as they did at the outset of the coronavirus pandemic.Releasing them would “add more confusion than clarity, given that we just don’t know,” Ms. Swonk said.Mr. Powell will hold a news conference on Wednesday after the release of the Fed’s post-meeting statement, one that could be tense for a number of reasons: Mr. Powell will most likely face questions about what went wrong with the oversight of Silicon Valley Bank. The Fed was its primary regulator, and was aware of issues at the bank for more than a year before its crash.And Mr. Powell will have to explain how officials are thinking about their policy path at a complicated juncture, when the Fed will have to weigh economic momentum against blowups in the banking sector.Hiring has stayed very strong in recent months: Employers added more than 300,000 jobs in February, after more than half a million in January. Officials had expected hiring to slow substantially after a year when rapid interest rate increases pushed borrowing costs to above 4.5 percent in February, from near zero last March, the fastest pace of adjustment since the 1980s.Inflation, too, has showed unexpected stickiness. While the Consumer Price Index has been slowing on an annual basis for months, it remained unusually rapid at 6 percent in February. And a closely watched monthly consumer price measure that strips out food and fuel, the prices of which bounce around, picked back up.Economists at Barclays suggested that the incoming data would probably have prodded the Fed to opt for a larger half-point rate increase, all else equal. But given the continuing bank problems — and the fact that Silicon Valley Bank’s distress was partly tied to higher interest rates — they expected the Fed to move by a quarter-point at this meeting to avoid further unsettling banks.“The link between the rising funds rate and risks of further bank distress presents a clear tension for the F.OM.C.,” the economist Marc Giannoni and his colleagues wrote, referring to the Fed’s policy-setting Federal Open Market Committee. “Risk management considerations will warrant a less aggressive policy hike in March.”The economists noted that if the situation in the American banking system were not so closely tied to rising rates, Fed officials would most likely prefer to separate financial stability concerns from their fight against inflation.That is essentially what the European Central Bank chose to do last week. Officials there are also battling rapid inflation, and they are behind the Fed when it comes to raising interest rates, having started later. Their decision to raise rates a half-point came even as Credit Suisse fought for its life, prompting the Swiss government to arrange on Sunday a sale of the bank to UBS.“This is not going to stop our fight against inflation,” Christine Lagarde, the president of the European Central Bank, said in a news conference on March 16. She added that officials “don’t see any trade-off” between pushing for price stability and financial stability, and that central bankers had separate tools to achieve each.That sort of message could be one the Fed wants to emulate, Mr. Feroli, of J.P. Morgan, said. Yet there are key differences in the United States, where there have been outright bank failures and where Fed rate moves have been part of the stress causing the turmoil.Ms. Swonk, of KPMG, said that she did not think the E.C.B.’s actions would serve as a road map for the Fed “given that the road is shifting as we speak,” and that she expected policymakers to hold off on a rate move this week.“At this point in time, for the Fed, a pregnant pause is warranted,” she said. “It’s a marathon, not a sprint — hold back now, promise to do more later if needed.” More

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    Federal Reserve and Global Central Banks Act to Shore Up Dollar Access

    America’s central bank and its counterparts around the world are rushing to cushion markets against the impact of bank problems.WASHINGTON — The Federal Reserve and other major global central banks on Sunday announced that they would work to make sure dollars remain readily available across the global financial system as bank blowups in America and banking issues in Europe create a strain.The Fed, the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank and the Swiss National Bank announced that they would more frequently offer so-called swap operations — which help foreign banks to get weeklong access to U.S. dollar financing — through April. Instead of being weekly, the offerings will for now be daily.The point of the move is to try to prevent tumultuous conditions in markets as jittery investors react to the blowups of Silicon Valley Bank and Signature Bank in the United States and the arranged takeover of Credit Suisse by UBS in Europe. Upheaval in the financial sector can easily turn worse if investors struggle to move around their money — something that often happens because of a shortage of dollar funding in moments of stress. Swap lines can help to release those pressures.Still, the fact that the central banks are enhancing swap lines underlines how serious the fallout from the bank problems has become: Central banks typically pull out such programs amid acute problems, like in the 2008 financial crisis or the 2020 market meltdown at the onset of the coronavirus pandemic.The move was “a coordinated action to enhance the provision of liquidity,” according to the statement from the central banks.The move comes ahead of a big week for the Fed. The U.S. central bank is set to meet and announce its latest interest rate decision on Wednesday.Up until a few weeks ago, it seemed possible that the Fed could make a large half-point move at this meeting, as it tried to battle surprisingly stubborn inflation in an economy that had proved remarkably resilient.But with tumult coursing across the global banking system, investors now think that a large move is unlikely: They are betting on a smaller quarter-point move, or no move at all, as officials wait to digest how the financial system is handling the latest developments. Plus, turmoil in banking can lead to less lending, which could itself help to slow down the economy.The move was part of the Fed’s ongoing push to shore up stability in the global financial system. Just one week ago, the Fed and other regulators announced that Signature Bank had failed and moved to back up uninsured deposits at that firm and Silicon Valley Bank. The Fed also set up an emergency lending program to help banks to weather a tough period.That program allows banks to use bonds and other assets as collateral to obtain loans, and it values those securities at their original prices, not the prices at which they are currently trading in markets. For banks sitting on assets that are worth less after a year of steep Fed interest rate increases meant to combat rapid inflation, that could serve as a sort of relief valve, allowing them to raise cash without realizing big losses. More

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    Before Collapse of Silicon Valley Bank, the Fed Spotted Big Problems

    The bank was using an incorrect model as it assessed its own risks amid rising interest rates, and spent much of 2022 under a supervisory review.WASHINGTON — Silicon Valley Bank’s risky practices were on the Federal Reserve’s radar for more than a year — an awareness that proved insufficient to stop the bank’s demise.The Fed repeatedly warned the bank that it had problems, according to a person familiar with the matter.In 2021, a Fed review of the growing bank found serious weaknesses in how it was handling key risks. Supervisors at the Federal Reserve Bank of San Francisco, which oversaw Silicon Valley Bank, issued six citations. Those warnings, known as “matters requiring attention” and “matters requiring immediate attention,” flagged that the firm was doing a bad job of ensuring that it would have enough easy-to-tap cash on hand in the event of trouble.But the bank did not fix its vulnerabilities. By July 2022, Silicon Valley Bank was in a full supervisory review — getting a more careful look — and was ultimately rated deficient for governance and controls. It was placed under a set of restrictions that prevented it from growing through acquisitions. Last autumn, staff members from the San Francisco Fed met with senior leaders at the firm to talk about their ability to gain access to enough cash in a crisis and possible exposure to losses as interest rates rose.It became clear to the Fed that the firm was using bad models to determine how its business would fare as the central bank raised rates: Its leaders were assuming that higher interest revenue would substantially help their financial situation as rates went up, but that was out of step with reality.By early 2023, Silicon Valley Bank was in what the Fed calls a “horizontal review,” an assessment meant to gauge the strength of risk management. That checkup identified additional deficiencies — but at that point, the bank’s days were numbered. In early March, it faced a run and failed, sending shock-waves across the broader American banking system that ultimately led to a sweeping government intervention meant to prevent panic from spreading. On Sunday, Credit Suisse, which was caught up in the panic that followed Silicon Valley Bank’s demise, was taken over by UBS in a hastily arranged deal put together by the Swiss government.Major questions have been raised about why regulators failed to spot problems and take action early enough to prevent Silicon Valley Bank’s March 10 downfall. Many of the issues that contributed to its collapse seem obvious in hindsight: Measuring by value, about 97 percent of its deposits were uninsured by the federal government, which made customers more likely to run at the first sign of trouble. Many of the bank’s depositors were in the technology sector, which has recently hit tough times as higher interest rates have weighed on business.And Silicon Valley Bank also held a lot of long-term debt that had declined in market value as the Fed raised interest rates to fight inflation. As a result, it faced huge losses when it had to sell those securities to raise cash to meet a wave of withdrawals from customers.The Fed has initiated an investigation into what went wrong with the bank’s oversight, headed by Michael S. Barr, the Fed’s vice chair for supervision. The inquiry’s results are expected to be publicly released by May 1. Lawmakers are also digging into what went awry. The House Financial Services Committee has scheduled a hearing on recent bank collapses for March 29.Michael S. Barr’s review of the Silicon Valley Bank problems will focus on a few key questions.Manuel Balce Ceneta/Associated PressThe picture that is emerging is one of a bank whose leaders failed to plan for a realistic future and neglected looming financial and operational problems, even as they were raised by Fed supervisors. For instance, according to a person familiar with the matter, executives at the firm were told of cybersecurity problems both by internal employees and by the Fed — but ignored the concerns.The Federal Deposit Insurance Corporation, which has taken control of the firm, did not comment on its behalf.Still, the extent of known issues at the bank raises questions about whether Fed bank examiners or the Fed’s Board of Governors in Washington could have done more to force the institution to address weaknesses. Whatever intervention was staged was too little to save the bank, but why remains to be seen.“It’s a failure of supervision,” said Peter Conti-Brown, an expert in financial regulation and a Fed historian at the University of Pennsylvania. “The thing we don’t know is if it was a failure of supervisors.”Mr. Barr’s review of the Silicon Valley Bank collapse will focus on a few key questions, including why the problems identified by the Fed did not stop after the central bank issued its first set of matters requiring attention. The existence of those initial warnings was reported earlier by Bloomberg. It will also look at whether supervisors believed they had authority to escalate the issue, and if they raised the problems to the level of the Federal Reserve Board.The Fed’s report is expected to disclose information about Silicon Valley Bank that is usually kept private as part of the confidential bank oversight process. It will also include any recommendations for regulatory and supervisory fixes.The bank’s downfall and the chain reaction it set off is also likely to result in a broader push for stricter bank oversight. Mr. Barr was already performing a “holistic review” of Fed regulation, and the fact that a bank that was large but not enormous could create so many problems in the financial system is likely to inform the results.Typically, banks with fewer than $250 billion in assets are excluded from the most onerous parts of bank oversight — and that has been even more true since a “tailoring” law that passed in 2018 during the Trump administration and was put in place by the Fed in 2019. Those changes left smaller banks with less stringent rules.Silicon Valley Bank was still below that threshold, and its collapse underlined that even banks that are not large enough to be deemed globally systemic can cause sweeping problems in the American banking system.As a result, Fed officials could consider tighter rules for those big, but not huge, banks. Among them: Officials could ask whether banks with $100 billion to $250 billion in assets should have to hold more capital when the market price of their bond holdings drops — an “unrealized loss.” Such a tweak would most likely require a phase-in period, since it would be a substantial change.But as the Fed works to complete its review of what went wrong at Silicon Valley Bank and come up with next steps, it is facing intense political blowback for failing to arrest the problems.Supervisors at the Federal Reserve Bank of San Francisco, which oversaw Silicon Valley Bank, issued six citations in 2021.Aaron Wojack for The New York TimesSome of the concerns center on the fact that the bank’s chief executive, Greg Becker, sat on the Federal Reserve Bank of San Francisco’s board of directors until March 10. While board members do not play a role in bank supervision, the optics of the situation are bad.“One of the most absurd aspects of the Silicon Valley bank failure is that its CEO was a director of the same body in charge of regulating it,” Senator Bernie Sanders, a Vermont independent, wrote on Twitter on Saturday, announcing that he would be “introducing a bill to end this conflict of interest by banning big bank CEOs from serving on Fed boards.”Other worries center on whether Jerome H. Powell, the Fed chair, allowed too much deregulation during the Trump administration. Randal K. Quarles, who was the Fed’s vice chair for supervision from 2017 to 2021, carried out a 2018 regulatory rollback law in an expansive way that some onlookers at the time warned would weaken the banking system.Mr. Powell typically defers to the Fed’s supervisory vice chair on regulatory matters, and he did not vote against those changes. Lael Brainard, then a Fed governor and now a top White House economic adviser, did vote against some of the tweaks — and flagged them as potentially dangerous in dissenting statements.“The crisis demonstrated clearly that the distress of even noncomplex large banking organizations generally manifests first in liquidity stress and quickly transmits contagion through the financial system,” she warned.Senator Elizabeth Warren, Democrat of Massachusetts, has asked for an independent review of what happened at Silicon Valley Bank and has urged that Mr. Powell not be involved in that effort.  He “bears direct responsibility for — and has a long record of failure involving” bank regulation, she wrote in a letter on Sunday.Maureen Farrell More

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    Biden Asks Congress for New Tools to Target Executives of Failed Banks

    The request is a response to the federal rescue of Silicon Valley Bank and Signature Bank, and it seeks to impose new fines and other penalties.WASHINGTON — President Biden asked Congress on Friday to pass legislation to give financial regulators broad new powers to claw back ill-gotten gains from the executives of failed banks and impose fines for failures.The proposal, a response to the federal rescue of depositors at Silicon Valley Bank and Signature Bank last week, would also seek to bar executives at failed banks from taking other jobs in the financial industry.The measures contained in Mr. Biden’s plan would build on existing regulatory powers held by the Federal Deposit Insurance Corporation. Administration officials were still weighing on Friday whether to ask Congress for further changes to financial regulation in the days to come.“Strengthening accountability is an important deterrent to prevent mismanagement in the future,” Mr. Biden said in a statement released by the White House.“When banks fail due to mismanagement and excessive risk taking, it should be easier for regulators to claw back compensation from executives, to impose civil penalties, and to ban executives from working in the banking industry again,” he said, adding that Congress would have to pass legislation to make that possible.“The law limits the administration’s authority to hold executives responsible,” he said.One plank of the proposal would broaden the F.D.I.C.’s ability to seek the return of compensation from executives of failed banks, in response to reports that the chief executive of Silicon Valley Bank sold $3 million in shares of the bank shortly before federal regulators took it over a week ago. Regulators’ current clawback powers are limited to the largest banks; Mr. Biden would expand them to cover banks the size of Signature and Silicon Valley Bank.In a contrast with top Silicon Valley Bank officials, a senior Signature Bank executive and one of its board members bought shares in the firm’s stock last Friday while it was experiencing a run, regulatory filings show. Signature’s chairman, Scott Shay, bought 5,000 shares of Signature stock while one of its directors, Michael Pappagallo, bought 1,500 shares.The president is also asking Congress to lower a legal bar that the F.D.I.C. must clear in order to bar an executive from a failed bank from working elsewhere in the financial industry. That ability currently applies only to executives who engage in “willful or continuing disregard for the safety and soundness” of their institutions. He is similarly seeking to broaden the agency’s ability to impose fines on executives whose actions contribute to the failure of their banks.The proposals face an uncertain future in Congress. Republicans control the House and have opposed other pushes by Mr. Biden to strengthen federal regulations. A 2018 law to roll back some of the regulations on banking that were approved after the 2008 financial crisis passed the House and Senate with bipartisan support.Senator Steve Daines, Republican of Montana, faulted Mr. Biden’s focus on regulation and indicated that he would not support any move to impose new rules on the banking sector.“What we don’t need is more onerous regulations on well-managed and sound Montana banks that didn’t fail,” Mr. Daines said in a statement on Friday evening.Democrats were far more vocal in supporting the call for new rules. The chair of the Senate Banking Committee, Sherrod Brown of Ohio, said in a statement emailed to reporters that regulators needed “stronger rules to rein in risky behavior and catch incompetence.”He added that in addition to executives who had failed at their duties, there should be a way to hold accountable the “regulators tasked with overseeing them.”In a letter to the chairs of the Securities and Exchange Commission, the F.D.I.C. and the Fed, Representative Maxine Waters, a Democrat from California, asked the regulators to use the “maximum extent” of their current powers to hold both banks’ senior executives and board directors accountable.She added that the Dodd-Frank law enacted after the 2008 financial crisis had given agencies more powers than they had yet used to tie executive compensation in the financial industry to successful risk management strategies.“While I am moving quickly to develop legislation on clawbacks and other matters arising from the collapse, it is critical that your agencies act now to investigate these bank failures and use the available enforcement tools you have to hold executives fully accountable for any wrongful activity,” she wrote. More