Government and Politics
March 14, 2023
The Trump banking law rolled back ‘too big to fail’ rules and created conditions for collapse of Silicon Valley Bank
WASHINGTON, D.C. – U.S. Senators Bob Menendez and Cory Booker (both D-N.J.) today joined Sen. Elizabeth Warren (D-Mass.), Congresswoman Katie Porter (D-Calif.-47), and dozens of colleagues in both the Senate and House of Representatives to introduce the Secure Viable Banking Act, legislation that would repeal Title IV of the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018 following the collapse of Silicon Valley Bank (SVB) and Signature Bank. Sens. Menendez and Booker, both longtime consumer protection advocates, were outspoken about the dangers of passing the Economic Growth, Regulatory Relief, and Consumer Protection Act five years ago, which reduced critical oversight and capital requirements for large banks.
“Five years ago, I stood on the Senate floor to warn my colleagues that only in Washington would anyone think it’s a good idea to mark the ten-year anniversary of the 2008-2009 financial crisis by passing S.2155, a bill that dared big banks to get bigger and increased risk to taxpayers,” said Senator Bob Menendez. “After this weekend’s collapse of Silicon Valley Bank and Signature, the world saw why it was misguided to pass S.2155, which rolled back critical Dodd-Frank regulations for banks like SVB, including enhanced prudential standards and stress tests. We must immediately repeal Title IV of S.2155 to ensure that we restore needed oversight of these systemically important institutions that have the potential to wreck our economy and the livelihoods of American families. We cannot afford to get this wrong and must act with the urgency this moment requires.”
“Congress should have never rolled back regulations put into place to prevent exactly the kind of bank failures we saw play out in recent days. We must now act to restore these protections to strengthen our banking system, safeguard our economy, and ensure that the hard-earned money of families and small businesses is better protected,” said Senator Cory Booker.
Title IV of the Economic Growth, Regulatory Relief, and Consumer Protection Act raised the asset threshold at which a bank is considered and regulated as a “systemically important financial institution” to $250 billion, exempting SVB and other mid-sized banks from regular stress testing and enhanced liquidity, risk management, and resolution plan, or “living will,” requirements. The lawmakers' new bill would repeal these dangerous regulatory rollbacks, which invited banks to load up on risk and increase profits, by restoring critical Dodd-Frank protections.