In the aftermath of the failure of Silicon Valley Bank and Signature Bank, many rushed to blame their demise on a lack of regulation. In particular, they focused on the fact that these banks were not required to undergo a Federal Reserve stress test.

Indeed, small and midsize banks are exempt from the stress test requirement. Did that lead to the current banking crisis?

This issue came up recently when Michael Barr was testifying before Congress. He serves as the Fed's vice chair of supervision. Sen. Joh Kennedy (R-La.) asked him a poignant question.

If you had stress-tested Silicon Valley bank in 2022, it wouldn't have made any difference, would it?"