- Some Democrats have blamed Trump-era regulation for the Silicon Valley Bank collapse.
- In 2018, President Trump signed into law a bill that reversed provisions of the Dodd-Frank Act and eased oversight of banks.
- Senator Bernie Sanders said the SVB’s failure was a “direct result” of these rollbacks.
Former President Donald Trump is hot on the bankruptcy of Silicon Valley Bank.
The reason goes back to 2018.
On Friday, regulators shut down Silicon Valley Bank. After a tumultuous few days of failed fundraising and a flood of customers withdrawing money from banks. After crypto-friendly signatory banks shut down on Sunday, the U.S. Treasury Department, the Federal Reserve, and the Financial Deposit Insurance Corporation made a controversial move by giving depositors a bailout, threatening to keep them out of harm’s way. It also vowed to be “completely protected” against monetary loss.
Lawmakers on both sides of the aisle criticized the Fed’s actions, but some Democrats saw Trump’s rollback of consumer protections in the 2018 Dodd-Frank Act as the main cause of the SVB’s demise. The rollback eased scrutiny on banks with less than $250 billion in assets. This means that the landmark post-financial-crisis legislation only applies to a few large banks.
“Greg Becker, CEO of Silicon Valley Bank, was one of many powerful executives who lobbied Congress to weaken the law,” said Massachusetts Senator Elizabeth Warren. I have written in Monday’s opinion piece. “In 2018, the big banks won. With support from both parties, President Donald Trump signed into law rolling back key parts of the Dodd-Frank Act. Regulators, including Chairman Jerome Powell, have exacerbated a bad picture and institutions are taking risks.”
“The failure of the Silicon Valley Bank is a direct result of my strong opposition to the ridiculous banking deregulation bill of 2018 signed by Donald Trump,” Senator Bernie Sanders of Vermont said in a statement.
In particular, Bernie Frank, co-author of the Dodd-Frank Act, told Bloomberg On Sunday, he said if his first bill didn’t pass, “we’re going to see more damage these days.”
“I don’t think it had any effect,” Frank said. “I don’t think there has been any slack on the part of regulators regulating this category of banks in the $50 billion to $250 billion range.”
Still, Democrats aren’t too convinced. This is why Trump’s actions are in the spotlight now that the SVB is closed.
What happened to Dodd Frank in 2018
The Dodd-Frank Act was signed into law in 2010 after the 2008 financial crisis sent shockwaves through the banking system, causing Washington Mutual to collapse in what is now known as the largest bank failure in the United States. it was done. It was designed to protect consumers from fraudulent financial practices while increasing accountability in the U.S. banking system.
2018, House passed rollback The Dodd-Frank Act passed the regulation by a vote of 258 to 159, and 17 Democrats joined Republicans in the Senate to bring the bill to President Trump’s desk and sign it into law. The bill raised the regulatory standard threshold from his $50 billion to his $250 billion. This allowed the largest U.S. banks to fall short of his 10 banks to come under greater federal scrutiny, while banks with assets less than his $250 billion escaped increased scrutiny.
“Today is truly a great day for America, and a great day for American workers and small businesses across the country,” Trump said. Said “The legislation I am signing today will repeal the devastating Dodd-Frank Act that is crushing community banks and credit unions across the country.They have faced such problems.”
House Speaker Paul Ryan, who was Speaker of the House when the bill passed, said it was a step toward “freeing the economy from overregulation”. Nancy Pelosi said at the time that it was “bad bill masquerading as supporting community banks,” Warren said. urged Her colleagues called for the bill to be rejected, saying “Congress has given the big banks enough favors” before the House voted on it.
Still, in the wake of the SVB, some Democrats who voted to roll back the Trump era support their decision. Said ABC News on Sunday reported that the law “introduced an appropriate level of regulation for medium-sized banks.”
“What we have to focus on now is how we make sure there is no contagion, and at the same time, what we believe SVB can get,” Warner said.
It’s unclear what regulators will do next, but Democrat Rep. Katie Porter wants to make sure something like this never happens again.she I have written In an email on Sunday saying she was writing a bill to overturn a 2018 law, Congress said in a bipartisan vote that Congress had bowed to Wall Street and loosened our banking laws. No problem, so I’m writing… a law to overturn that dangerous law.”