The Federal Reserve was in discussions with Silicon Valley Bank the day before its collapse to move pledgable collateral to the discount window, a key facility long associated with providing emergency loans to banks, the Fed's head of banking supervision told a Congressional committee Wednesday.

Fed Vice Chairman for Supervision Michael Barr said he first became aware of stress at Silicon Valley Bank on the afternoon of March 9, but that the bank reported to supervisors that morning that deposits were stable.

"(Fed) staff were working with Silicon Valley Bank basically all afternoon and evening and through the morning the next day to pledge as much collateral as humanly possible to the discount (window) on Friday," Barr said to the House Financial Services Committee.

The failures of SVB, and days later, Signature Bank, set off a broader loss of investor confidence in the banking sector that pummeled stocks and stoked fears of a full-blown financial crisis.

Lawmakers from both political parties pressed regulators on whether the Fed should have been more aggressive in its oversight of SVB in the second congressional hearing into the sudden collapse of the two lenders.

A deal to rescue Swiss giant Credit Suisse last week and a sale of SVB's assets to First Citizens Bancshares this week has helped restore some calm to markets, but investors remain wary of more troubles lurking in the financial system.

Barr on Tuesday criticized SVB for going months without a chief risk officer and how it modeled interest rate risk, which he said "was not at all aligned with reality."

Barr told the Senate Banking Committee he first became aware of the interest rate risk issues at SVB in mid-February, while Fed supervisors had been raising issues with the bank directly in months prior to that.

Some Democrats have also argued a 2018 bank deregulation law is to blame. That law, mostly backed by Republicans but also some moderate Democrats, relaxed the strictest oversight for firms holding between $100 billion and $250 billion in assets, which included SVB and Signature.