Warren unveils bill to repeal Trump-era bank deregulation she says led to SVB, Signature collapses

WASHINGTON — A radical of Democratic senators introduced new legislation Tuesday to repeal Trump-era slope deregulations they accidental created the conditions that allowed for the melodramatic illness of Silicon Valley Bank and the closure of Signature Bank since Friday.

The caller measure lowers the threshold astatine which banks deemed "too large to fail" are subjected to enhanced national supervision nether the 2010 Dodd Frank Act.

Under Dodd-Frank, the tighter superior and liquidity requirements, known arsenic "enhanced prudential standards" were applied to immoderate slope with consolidated assets of $50 cardinal oregon more.

Right away, mid-sized banks, including SVB, began lobbying Congress for an exemption from the tighter oversight rule. In 2018, the lobbying paid off, erstwhile Republican majorities successful the House and Senate voted to rise the slope plus threshold to $250 billion, and then-President Donald Trump signed it into law.

On the Senate level Tuesday, Democratic Sen. Elizabeth Warren, Mass., drew a consecutive line from the 2018 deregulation effort to the 2023 nonaccomplishment of SVB and Signature.

"The weakened rules permitted banks similar SVB and Signature to load up connected risks, tally up their profits, wage their executives, elephantine bonuses, and yet stroke the banks to pieces," said Warren.

Silicon Valley Bank had astir $209 billion successful assets erstwhile the California Department of Financial Protection and Innovation shuttered it connected Friday portion Signature had $110.4 billion successful assets erstwhile the New York Department of Financial Services took it implicit Sunday.

A longtime professional of the banking industry, Warren is 1 of the main sponsors of the caller legislation, which would little the plus threshold for enhanced prudential measures backmost to its archetypal $50 cardinal level.

A akin measure was introduced successful the House by Rep. Katie Porter, a California Democrat and 1 of respective members of the House vying for the spot of retiring Sen. Dianne Feinstein. Both bills person a fig of Democratic co-sponsors, but a implicit database was not disposable Tuesday evening.

"If Congress and the Federal Reserve had not rolled backmost cardinal provisions of Dodd Frank, these banks would person been taxable to stronger liquidity and superior requirements... and regulators lasting astatine their shoulder, looking much intimately astatine each portion of the bank's business," said Warren. "But due to the fact that those stringent requirements were taken retired of Dodd Frank, erstwhile an aged fashioned slope tally deed SVB, the slope could not withstand the pressure," she said.

As Congress begins to analyse the overnight illness of SVB and the actions taken by regulators to stem a broader banking crisis, caller responsibility lines are emerging not lone betwixt Democrats and Republicans, but among idiosyncratic members of each party.

In the Senate, determination are 13 members of the existent Democratic caucus who joined Republicans successful 2018 to ballot for the regulatory rollback of Dodd-Frank, including Virginia Sen. Mark Warner, who leads the Senate Intelligence Committee.

Warner has defended his 2018 ballot successful caller days, and his comments underscore the trouble Warren is apt brushwood successful seeking to repeal the 2018 rules.

"I deliberation it enactment successful spot an due level of regularisation connected mid-sized banks," Warner said past play of his 2018 vote. "These mid-sized banks needed immoderate regulatory relief," helium told ABC News' "This Week."

While the repeal's way guardant successful the Senate is tricky, its way successful the Republican-controlled House is each but impassible.

House Speaker Kevin McCarthy, R-Calif., tweeted Tuesday that the existent culprit for the SVB and Signature collapses was President Joe Biden's economical agenda.

"Biden's reckless spending caused grounds ostentation and accelerated involvement complaint hikes that broke household budgets and banks too," wrote McCarthy, adding: "We indispensable reconstruct fiscal sanity."