In a recent statement, Fed Vice President for Financial Institutions Michael Barr emphasized that Congress should raise the debt ceiling, warning that failure to do so will have serious consequences for the economy. Barr said it would be “quite unfortunate” for the economy not to raise the debt ceiling.
FED Executive Barr Evaluated Collapsed Banks and Provided Details on FED’s Activities
Barr also touched on tightening credit conditions and how they affect interest rate decisions. He stated that the FED is watching the situation closely and banks have an obligation to manage interest rates both upwards and downwards.
In addition, Barr underlined in his statement that this responsibility is not fulfilled by the banks in the current economic conditions, as seen in the SVB.
Barr also warned that banks’ responses to the current economic situation could lead to a reduction in overall credit availability, which is something the Fed is watching closely.
Michael S. Barr has served as the Fed’s second vice president of audit since 2022. Barr is responsible for overseeing the Fed’s bank regulation and supervision activities. Barr will also serve as a member of the Federal Reserve System Board of Presidents during his term, which will expire on January 31, 2032.
Barr recently testified before the Senate Banking Committee and the House of Representatives Financial Services Committee about the collapse of Silicon Valley Bank (SVB) and Signature Bank, the crypto-friendly banks that sank due to poor management of interest rate and liquidity risks.
*Not investment advice.
