The Federal Reserve also cited lack of deposit insurance and a reliance on the "speculation"-driven crypto market in its decision to deny Custodia's bid to become a state-chartered member bank.

Sen. Tim Scott, R-S.C., and others on the Banking Committee have requested CAMELS scores for the failed bank and various other supervisory information from the Fed.

The Federal Reserve wants a smaller balance sheet to help rein in inflation. But uncertainty in the banking system is pushing it in the opposite direction.

Economists have warned since last summer that speedy monetary tightening could be destabilizing. This week, the Federal Reserve will decide whether to stay on that course.

Central banks involved in the dollar swaps will "increase the frequency of 7-day maturity operations from weekly to daily," the banks said.

Sen. Sherrod Brown, chairman of the Senate Banking Committee, said in a letter to regulators that they should consider the role of social-media-led coordination among depositors.

The service offered by the Federal Reserve — after years of delays — is expected to expand access to fast payments clearing to a broader selection of banks and financial institutions.

After the failure of two banks between $100 billion and $250 billion of assets, many are asking regulators to change their oversight practices for these banks. The Fed has a wide berth to make a wide array of changes.

The recent bank failures have changed market thinking about the Federal Reserve's next move.

The White House and regulators have sought to ease fears about the banking system, but business depositors as well as regional bank investors remain jittery. Speculation has accelerated about potential buyers of the failed Silicon Valley and Signature banks, the health of certain other regionals and how deposit costs will change.