By Pete Schroeder

(Reuters) -The Federal Reserve is contemplating harder guidelines and oversight for midsize banks related in measurement to Silicon Valley Financial institution, which collapsed immediately final week, in keeping with a supply conversant in the matter.

The financial institution’s collapse set off fears throughout the monetary system, drove a unprecedented authorities effort to reassure depositors and backstop the system, and set off debate about reversing earlier rule easing for regional banks.

Now, a assessment of the $209 billion financial institution’s failure being performed by Fed Vice Chair for Supervision Michael Barr might result in strengthened guidelines on banks within the $100 billion to $250 billion vary, the supply informed Reuters.

That assessment of Fed supervision and regulation of the financial institution will likely be launched by Could 1, and augments a assessment of financial institution capital guidelines by Barr already underway.

The Wall Road Journal reported on Tuesday the Fed was reconsidering rules relating to midsize banks, which might result in extra stringent capital and liquidity necessities and doubtlessly beefed up annual “stress assessments.”

At the moment, the hardest capital and liquidity necessities are reserved for the nation’s largest banks, after a 2018 deregulation legislation from Congress and Fed rule-making underneath prior management eased these guidelines for smaller companies. Bigger companies additionally face extra frequent and rigorous stress testing and accounting necessities.

All these necessities may very well be reworked by the Fed within the aftermath of the collapse, which has additionally spurred contemporary calls from proponents of harder guidelines for regulators to rebuild these restrictions.

On Tuesday, 50 Democratic lawmakers, together with Senator Elizabeth Warren, launched a invoice to repeal the legislation that eased guidelines for banks in 2018.