During this morning’s Banking Committee hearing on how to regulate banks and other financial institutions considered “too big to fail,” Senator Warner asked Shelia Bair, chairman of the Federal Deposit Insurance Commission, about the results of the bank “stress tests,” the results of which will be released tomorrow.

Though it’s been widely reported that none of the 19 banks will “fail” the stress tests, Senator Warner wanted to know what we do from here, particularly to encourage the institutions that need additional capital to find it in the private sector.  

Chairman Bair said that the results should reassure the markets and the public:

I think this will be a confidence-instilling announcement; there will be additional needs for capital buffers for some institutions, but I think there will be mechanisms to do that within the next six months and yes I agree… the Treasury can be there as a back-stop, but they should look at the private sector, particularly, to find new equity.

Senator Warner also ask about suggestions that we create a Systemic Risk Council to oversee larger financial institutions, saying the idea had some “attractiveness and some challenges.”   Notably, he said that Congress would need to give such a council the authority to step in “with some force” and make certain that these institutions could not cause systemic risk, and require all the information be shared across all the regulatory agencies, including the FDIC, the SEC, and the Treasury Department.