The failure of Silicon Valley Bank and Signature Bank is putting new scrutiny on a 2018 law that rolled back some banking regulations, with some Democrats calling to restore those rules as the feds step in to protect depositors.
announcing federal actions that the deregulation law played a role and called on Congress to toughen bank rules.
“Had Congress and the Federal Reserve not rolled back the stricter oversight, S.V.B. and Signature would have been subject to stronger liquidity and capital requirements to withstand financial shocks,” Warren wrote Monday. “They would have been required to conduct regular stress tests to expose their vulnerabilities and shore up their businesses. But because those requirements were repealed, when an old-fashioned bank run hit S.V.B.
“Let’s be clear. The failure of Silicon Valley Bank is a direct result of an absurd 2018 bank deregulation bill signed by Donald Trump that I strongly opposed,” he said in a statement. “Five years ago, the Republican Director of the Congressional Budget Office released a report finding that this legislation would ‘increase the likelihood that a large financial firm with assets of between $100 billion and $250 billion would fail.
"I do think these midsized banks needed some regulatory relief," Warner said on ABC's"This Week," adding that the law"put in place an appropriate level of regulation on midsized banks."
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