Following the recent collapse of Silicon Valley Bank and Signature Bank, Senator Elizabeth Warren and Representative Katie Porter (D-CA) have introduced a bill to repeal a 2018 Trump-era banking regulation rollback that raised the threshold for banks to undergo extra federal regulations from $50 billion to $250 billion, exempting dozens of banks, including Silicon Valley Bank and Signature Bank, from the strongest federal oversight.[0]
The 2018 Economic Growth, Regulatory Relief, and Consumer Protection Act was passed by Congress in 2018 in an effort to provide “regulatory relief” for midsized banks. The bill raised the threshold for banks to be subject to the stringent Dodd-Frank Act instituted in the aftermath of the Great Recession, and was passed by the U.S. Senate on March 14, 2018 by a vote of 67 to 31, with 17 Democrats approving the legislation.[1] It was then passed by the House on May 22, 2018 by a vote of 258 to 159, with 33 Democrats voting in favor of it, and was signed into law by President Trump days later.[2]
Senator Warren has heavily criticized the bill, saying that “Congress played a real role in Silicon Valley Bank’s collapse” and that “in 2018, Republicans and some Democrats caved to Wall Street and passed a law that lets certain banks take more risk.”[3] Warren has also written to Silicon Valley Bank CEO Greg Becker, saying that “you have nobody to blame for the failure at your bank but yourself and your fellow executives” for lobbying for weaker rules.[4]
The Federal Reserve has opened up a review into the “supervision and regulation” of Silicon Valley Bank after the bank failed on Friday, triggering fears of more widespread damage to the economy.[5] The agency announced that Michael S. Barr, the Vice Chair for Supervision, will spearhead the investigation, with results to be made public by May.[5] Warren has called for Federal Reserve Chair Jerome Powell to recuse himself from the agency’s internal probe of its role in the Silicon Valley Bank collapse, citing Powell’s “deregulatory move” and his direct contribution to the collapse.[6]
President Biden has sought to assure Americans that “our banking system is safe” and that “your deposits will be there when you need them.”[1] Regulators are also taking measures to prevent a “contagion” from spreading to other banks.[7]
0. “Elizabeth Warren in letter to Signature Bank seeks answers for ‘disastrous’ collapse” Yahoo News, 16 Mar. 2023, https://news.yahoo.com/elizabeth-warren-in-letter-to-signature-bank-seeks-answers-for-disastrous-collapse-110000202.html
1. “They warned in 2018 that weakening regulations could lead to failure like SVB. Now Elizabeth Warren and other …” The Boston Globe, 13 Mar. 2023, https://www.bostonglobe.com/2023/03/13/nation/they-warned-2018-that-weakening-regulations-could-lead-failure-like-svb-now-elizabeth-warren-other-democrats-want-those-changes-back/
2. “SVB Collapse: Full List of Lawmakers Who Voted to Weaken Banking Regulation” Newsweek, 14 Mar. 2023, https://www.newsweek.com/svb-collapse-full-list-lawmakers-who-voted-weaken-banking-regulation-1787573
3. “Bankers Lobbied for Deregulation, Congress Capitulated, and Now Banks Are Collapsing” The Nation, 14 Mar. 2023, https://www.thenation.com/article/economy/silicon-valley-bank-congress-deregulation/
4. “Following bank crashes, Sen. Warren calls for hearings with executives” Boston.com, 15 Mar. 2023, https://www.boston.com/news/national-news/2023/03/14/elizabeth-warren-silicon-valley-signature-bank-collapse-hearings-executives
5. “Warren Calls on Fed’s Jerome Powell to Recuse Himself From Investigating Silicon Valley Bank Failure” Truthout, 14 Mar. 2023, https://truthout.org/articles/warren-jerome-powell-should-recuse-himself-from-bank-probe-for-role-in-failure
6. “Powell Should Recuse Himself From Fed’s Internal Review Of SVB Oversight, Elizabeth Warren Says” Forbes, 14 Mar. 2023, https://www.forbes.com/sites/saradorn/2023/03/14/powell-should-recuse-himself-from-feds-internal-review-of-svb-oversight-elizabeth-warren-says/
7. “After Silicon Valley Bank collapses, plenty of worries over what’s next” NPR, 14 Mar. 2023, https://www.npr.org/2023/03/14/1163135286/silicon-valley-bank-collapse-fallout-whats-next