By Joseph Anthony, FWD News
8:07 PM EST, March 12, 2023
When President Donald Trump signed a broad legislation meant to reduce the costs of complying with regulations, he loosened control of local and small lenders. The threshold for being deemed systemically significant, a designation that imposes obligations like yearly stress testing, was raised in May 2018 from $50 billion to $250 billion in assets.
Whoa! Here it is. The moment in 2018 when Donald Trump removed the Dodd-Frank regulations that would have prevented the Silicon Valley Bank collapse. Don’t let anyone forget this. pic.twitter.com/3ccLFMWH2o
— MeidasTouch (@MeidasTouch) March 12, 2023
At the time, SVB had recently passed the $50 billion mark. It increased to $220 billion in early 2022, rising to the position of 16th-largest US bank.
Greg Becker, the chief executive of SVB, pleaded with the government to raise the threshold in 2015, saying doing so would increase customer expenses and “stifle our ability to give credit to our clients.” Traditional banking, which focuses on accepting deposits and disbursing loans to expanding businesses,
Senator Elizabeth Warren, a Democrat from Massachusetts, a state where SVB operated branches, claimed in a statement on friday that easing the regulations contributed to SVB’s collapse.
“President Trump and congressional Republicans’ decision to roll back Dodd-Frank’s “too big to fail” rules for banks like SVB—reducing both oversight and capital requirements—contributed to a costly collapse,” she said in a statement.
“SVB executives must be held accountable for any malfeasance or mismanagement that led to this failure,” Warren added.
Californian congressman Eric Swalwell went further and also blamed Speaker McCarthy. “It’s clear that the efforts by former President Trump and Kevin McCarthy to pass the “Reform Act” in 2018 inoculated Silicon Valley Bank from stress tests and regulations that would have prevented this crisis.” Swalwell said in a statement on Sunday.