The failures of Silicon Valley Bank and Signature Bank demonstrated that regulatory requirements should be reassessed, U.S. Treasury Secretary Janet Yellen said in a speech to the National Association for Business Economics.

The failure of the two regional banks this month “demonstrate that our business is unfinished,” she said, while pointing out that “the banking system is significantly stronger than it was heading into the Global Financial Crisis” of 2008-09. “This is perhaps best illustrated by the fact that we’ve seen relative stability in the overall banking sector this month, even as concerns grew about specific institutions.”

“Still, any time a bank fails, it is cause for serious concern,” she said. “Regulatory requirements have been loosened in recent years,” which make it “appropriate to assess the impact of these deregulatory decisions and take any necessary actions in response.”

Citing the “forceful interventions” that Treasury, the Federal Reserve Board and the Federal Deposit Insurance Corp. (FDIC) took to protect Silicon Valley Bank's and Signature Bank’s depositors, she said that the government would be prepared to do it again if the occasion warranted.

In response to the banks’ collapse, the Biden Administration is preparing recommendations to reimpose rules on banks with assets between $100 billion and $250 billion, The Washington Post reported.  Such regulations existed under the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, but were dismantled by the 2018 Economic Growth, Regulatory Relief, and Consumer Protection Act.

In her speech, Yellen also discussed the work that is being done to regulate nonbanks, or “shadow banks,” which "consist of financial companies that carry out traditional banking functions, but are outside of, or only loosely linked to, depository institutions." They include money market funds, hedge funds and crypto assets.

“There are two guiding principles in our work on nonbanks,” she said. “First, policymakers should address risks regardless of where they emanate from. Substance is more important than form; similar activities that create comparable financial stability risks should be subject to comparable regulatory scrutiny. Second, policymakers should adapt and tailor policies to fit the unique structural features of the institutions and markets they are regulating.”

Yellen also called on Congress to raise or suspend the debt limit. “A breach of the debt ceiling could lead to a prolonged downturn and a global financial crisis,” she said. “And it could upend the lives of millions of Americans and those around the world.”