Warren and Porter Propose Bill to Strengthen Federal Oversight of Banks After Silicon Valley Bank and Signature Bank Collapse

In the wake of the collapse of Silicon Valley Bank and Signature Bank, Senator Elizabeth Warren and Representative Katie Porter of California have proposed a bill that would put banks with at least $50 billion in assets back under the Dodd-Frank Act’s stringent regulations.[0] This would repeal a Trump-era banking regulation rollback that raised the threshold to $250 billion and exempted dozens of banks — including Silicon Valley Bank and Signature Bank — from the strongest federal oversight.[1]

The 2018 Economic Growth, Regulatory Relief, and Consumer Protection Act, which Silicon Valley Bank President Greg Becker and other major bankers lobbied for, drastically eased regulations that President Barack Obama had signed into law in response to the 2008 financial meltdown.[2] The bill raised the threshold for banks to undergo strict federal oversight from $50 billion to $250 billion, and it passed the Senate in March 2018, with 17 Democrats voting in favor.[3] The bill then passed the House, with 33 Democrats voting in favor, and it was signed into law by Trump days later.[4]

Warren has been a consistent critic of the circumstances that led up to the SVB failure, criticizing Trump-era rollbacks of the Dodd-Frank Act, which provided regulatory relief for midsized banks like SVB.[5] She has also slammed the regulators for their actions following the shut down, denouncing them for stepping in to “fully” protect depositors while leaving “millions of student loan borrowers in limbo.”[5]

In the aftermath of the bank collapses, Warren and Representative Porter have called for Federal Reserve Chair Jerome Powell to recuse himself from his agency’s internal probe of its role in the Silicon Valley Bank collapse, as his actions directly contributed to the collapse.[6] Powell will be leading a review of the Fed’s supervision and regulation of Silicon Valley Bank, to be released on May 1, and the U.S. Department of Justice and the U.S. Securities and Exchange Commission have also reportedly announced their own probes related to some of the bank’s executives selling stock in the weeks leading up to the closure.[7]

President Biden sought to assure Americans that “our banking system is safe” and that “your deposits will be there when you need them.”[3] Warren has proposed legislation to repeal the core of Trump’s bank law and strengthen the rules for banks.[8]

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. “Warren says $250000 cap in deposit insurance for banks should be reexamined” The Hill, 15 Mar. 2023, https://thehill.com/business/banking-financial-institutions/3901205-warren-says-250000-cap-in-deposit-insurance-for-banks-should-be-reexamined/

2. “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/

3. “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/

4. “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

5. “Warren scoffs at idea that banks can test their own limits” Business Insider, 15 Mar. 2023, https://www.businessinsider.com/elizabeth-warren-banks-svb-silicon-valley-bank-bernie-sanders-trump-2023-3

6. “Elizabeth Warren urges Fed’s Powell to ‘step back,’ recuse himself from SVB review” Fox Business, 15 Mar. 2023, https://www.foxbusiness.com/politics/sen-warren-has-no-confidence-powell-dangerous

7. “Senator Warren says Fed chair ‘has to recuse himself' from reviewing regulatory failures” Cointelegraph, 15 Mar. 2023, https://cointelegraph.com/news/senator-warren-says-fed-chair-has-to-recuse-himself-from-reviewing-regulatory-failures

8. “Pressley Joins Warren, Porter, Dozens of Lawmakers in Unveiling Bill to Repeal 2018 Rollback of Critical Dodd-Frank …” Representative Ayanna Pressley, 15 Mar. 2023, https://pressley.house.gov/2023/03/15/pressley-joins-warren-porter-dozens-of-lawmakers-in-unveiling-bill-to-repeal-2018-rollback-of-critical-dodd-frank-protections/

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