Federal Reserve Vice Chair of Supervision Michael Barr told the Senate Banking Committee Tuesday that he anticipates a need to strengthen capital and liquidity rules for some regional banks in the wake of Silicon Valley Bank’s dramatic meltdown.

His admission came during an exchange with Democratic Senator Elizabeth Warren, who pressed Barr, FDIC Chair Martin Gruenberg and Treasury undersecretary Nellie Liang to admit tougher measures were needed to prevent such failures in the future. The Fed, Warren said, has the authority to hold banks of $100-250 billion in assets to stiffer standards. Silicon Valley Bank had $209 billion when it was seized by regulators on March 10, becoming the second-largest bank failure in U.S. history.

“I anticipate the need to strengthen capital and liquidity standards for banks with over $100 billion,” said Barr, responding to Warren.

The comments were the strongest indication to date that the Fed’s top official in charge of bank oversight favors a reworking of rules governing regional lenders that were loosened at the end of last decade. Those changes in 2018 and 2019 released financial institutions of Silicon Valley Bank's size from some of the strictest requirements imposed in the aftermath of the 2008 financial crisis, a downturn that pushed the banking system to the brink.

One key revision was the Fed’s decision to exempt banks with $100-$250 billion in assets from maintaining a standardized "liquidity coverage ratio" that is designed to show whether a lender has enough high-quality liquid assets to survive a crisis. Another was a decision to let most small and mid-sized institutions opt out of deducting paper losses on bonds from key regulatory capital levels. Silicon Valley Bank was among the banks that benefitted from both of those changes.

Lawmakers pressed Barr repeatedly Tuesday on whether he believed the Fed had failed to do its job as supervisor in the case of Silicon Valley Bank. “By all accounts, our regulators appear to have been asleep at the wheel,” said Senator Tim Scott, the top Republican on the committee.