Casten Reintroduces Bill to Require Chief Risk Officer at Big Banks
Washington, D.C. — U.S. Congressman Sean Casten (IL-06) introduced the Chief Risk Officer Enforcement and Accountability Act, legislation to require large banks to employ a Chief Risk Officer and increase notification requirements and public transparency when the position becomes vacant.
“We have seen time and again – like at Silicon Valley Bank – that it is a mistake for big banks to operate without a Chief Risk Officer for prolonged periods,” said Rep. Sean Casten. “Failing to employ and keep a Chief Risk Officer jeopardizes Americans’ hard-earned savings. I’m proud to introduce this legislation to help prevent future bank collapses by requiring that banks with $50 billion or more in assets retain a Chief Risk Officer and notify their regulator and the public if the position becomes vacant.”
Following the collapse of Silicon Valley Bank (SVB) in March 2023, a report by the Federal Reserve found that, among other things, a key factor contributing to, and likely expediting, SVB’s failure was the lack of a Chief Risk Officer from April 2022 to January 2023. SVB’s vacant CRO position violated Federal Reserve regulations during this time, but supervisors unfortunately decided not to pursue action as SVB was actively searching for a replacement.
The Chief Risk Officer Enforcement and Accountability Act would codify Federal Reserve 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, it 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.
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