Republicans gutting of federal regulations led to collapse of Silicon Valley Bank, watchdog group says

Photo: Minh Nguyen

Republicans doing the bidding of Wall Street for years led to the current banking crisis.

In 2018, Republicans led an effort, lobbied heavily by the financial industry, that resulted in a law, signed by former President Donald Trump, that gutted the Dodd-Frank Wall Street Reform and Consumer Protection Act’s risk assessment safeguards for midsize banks.

The effort, led by House Financial Services Committee Chair Patrick McHenry, gave federal agencies discretion in regulation, which paved the way for banks such as Silicon Valley Bank to take huge risks beyond their means without fear of real federal consequences, according to Accountable.US, a financial watchdog group.

“Chairman McHenry and fellow conservatives in the pocket of the financial industry rammed through a law that weakened Congressional oversight of midsize banks and pawned off responsibility to a Trump-appointed regulator who they knew shared their loyalties to Wall Street special interests,” said Liz Zelnick, director of economic security and corporate power for Accountable.US.

In the aftermath of SVB and Signature Bank collapse, at least 10 economic experts have called the collapse “a 100 percent avoidable problem,” blaming weakened banking regulations for “allowing banks like SVB and Signature to increase deposits” in the absence of stress tests, Zelnick said.

At hearings on the SVB collapse, Republicans on the Senate Banking and House Financial Services committees scolded federal regulators while denying their regulation busting efforts had no effect.

If McHenry was serious about “getting to the bottom” of what happened there would be testimony from the former Trump official that ran wild with deregulation of banks such as SVB thanks to McHenry’s own Dodd-Frank rollback bill, she said.

Once again, Republicans are trying to rewrite history and cover up their wrongdoing.

Comments

[azure]

No surprise. Most of the GOP members of Congress, past & present (for the past 20 years or so) seem to believe it's only people earning low incomes or who can't work who need to be told how to spend their income and be deprived of needed benefits (like SNAP) because their inability to earn enough to feed themselves and their children MUST be due to their laziness/unwillingness to work. While the wealthy must be continually encouraged by repeated "tax reform" that enables many to avoid paying much tax at all, compared to say, what's left of the middle class. As Warren Buffett said, he pays less in income tax then his secretary does. GOP presided over a massive increase in corrupt mortgage lending practices and/or pushing prospective residential real estate buyer into types of mortgages that, in the past, only wealthy (and money-knowledgeable) people used. Feckless use of by TBTF banks flourished unchecked and Greenspan saw nothing dangerous about the growth of a massive bubble. Then the GOP (and Obama continued it) bailed out the TBTF banks.
Bush II, Cheney, Inc., instigated an "off the budget" war whose costs are estimated to have reached almost 2 trillion. I guess Bush II, Cheney, Inc (the neocons) figured they wouldn't be around to deal w/alot of the fallout, i.e, huge real deficit.
After those actions, it would follow that they'd cater to those who did alot to create the bubble and who were fine w/just about beggaring Jefferson county, AL (JP Morgan Chase did the "financing" for sewer system improvement). https://www.al.com/news/birmingham/2014/12/one_year_later_jefferson_count.html Ultimately, it's Jefferson county rate payers who suffer/have to repay the somewhat reduced debt, although it seems that a group of them are protesting the rate increases. https://www.al.com/news/birmingham/2014/12/one_year_later_jefferson_count.html
In the past 6-7 years I kept seeing articles headlines about the banks protesting even the weak requirements of the Dodd-Frank Act--they'd learned their lesson, why were they still being unreasonably restricted/penalized? Didn't believe what TBTF bank reps were saying. SVB, Republic, etc., seems to have shown that once again, there's a far greater need not just for regulation, but actually implementing those regulations, i.e, doing the checks required and if a problem is revealed, requiring banks to take remedial or corrective action. But I doubt if a majority of Congress would support the enforcing agency if that happened. At least most of the GOP members of Congress wouldn't and some of the Dems would join them.

None of the TBTF banks have been broken up. They're all still "too big to (be allowed to) fail".
The Consumer Protection bureau is, imo, close to toothless, and it was used during the Trump administration to protect at least one kind of business, not the consumer.

[Rita]

Yes, the Republicans have this whole thing going that regulations are bad. Regulations are needed and it says a lot about American corporations that they spend billions fighting against regulations of any kind.

[azure]

GOP doesn't think all regulations are bad, too many of them are just fine with regulating women's reproductive choices, what books kids can read, etc. They also like to "regulate" use of public lands so that favored corporations can exploit and pollute those lands with impunity, fine with regulatory or legislative disenfranchisement of some types of voters too. DiSantis seems to have made a sizeable effort to tell Disney what to do/how to run an aspect of Disneyworld. For the time being, the now former board members of the special governing district in Orlando seems to have foiled DiSantis's attempt to control some aspects of Disneyworld by packing the board w/his own appointees--by placing restrictions on that board's actions. "“This essentially makes Disney the government,” board member Ron Peri said. “This board loses, for practical purposes, the majority of its ability to do anything beyond maintain the roads and maintain basic infrastructure.”
Among other things, a “declaration of restrictive covenants” spells out that the district is barred from using the Disney name without the corporation’s approval or “fanciful characters such as Mickey Mouse.”
That declaration is valid until “21 years after the death of the last survivor of the descendants of King Charles III, king of England living as of the date of this declaration,” if it is deemed to violate rules against perpetuity, according to the document. https://www.orlandosentinel.com/news/os-ne-disney-new-reedy-creek-board-powerless-20230329-qalagcs4wjfe3iwkpzjsz2v4qm-story.html

Supposedly GOP really doesn't like to regulate corporations--but that's what DiSantis seeks to do. But then GOPers, and extremists w/in that party have been demonstrating their lack of concern re: consistency for at least 20 years. Not that Dems are that consistent: see Biden's actions w/regards to the Willlow drilling project & mining on public lands.

Anything but deal w/important issues like building more affordable housing, replacing & upgrading essential infrastructure like water & sewer treatment plans & networks/systems, creating a viable system of providing national health care to all (a well funded NHS copy would be good) making the US a more economically equitable nation, etc, improved tech security, passing a powerful data privacy law (on & offline) that would enable private causes of actions (with plaintiffs able to get attorney fees if they prevail), class actions, and even punitive damages in for reckless negligence (like failing to install security patches more then 6 months after it/they were issued). Gun control such as Australia has seems too sensible for the US.

[Rita]

You're absolutely correct. The GOP will try with all the power they can muster to weaken positive regulations and laws and, as you point out, create new crazy ones such as regulating what kids read and what teachers teach. It's incredible. We all to keep fighting against these negative public policy initiatives.