WASHINGTON — Moderate Senate Democrats voted to relax regulations on midsize banks for 2018. They are now standing by their votes following the collapse of Silicon Valley Bank.
Senator Angus King (I-Maine), who caucuses alongside Democrats, stated that he would like to investigate “what actually occurred in this case” and whether a different set regulations would have been relevant before deciding whether or not the 2018 legislation was a mistake.
King stated, “I believe that ready, aim and fire is the best — not ready fire, aim.”
King was one of 17 Democratic conference members who voted for Republicans in 2018. He voted to relax regulatory scrutiny on banks with assets between $50 billion and $250 billion. This relief was sought by a variety of banks including Silicon Valley Bank.
Others who supported the bill signed by Donald Trump gave a similar wait and see answer regarding regulation.
Sen. Tim Kaine (D-Va.), stated that he doesn’t want to accept solutions until he hears the analysis. He noted that existing law allows regulators to “tailor rules” on banks ranging from $100 billion to $250 trillion.
Sens. Sens.
“It’s early. It’s too early. I believe we should complete the investigation into what really happened at Silicon Valley Bank. Bad management practices can’t be fixed by all the regulations in the world, and it seems that this is one of the problems at SVB,” Shaheen stated, while keeping the possibility open for her to reconsider the bill if she feels the findings are compelling.
She said, “But depending on the outcome of the election, I think it is appropriate for us to look at what was done and see if that still holds.”
When asked if the 2018 bill was a mistake by Sen. Michael Bennet (D-Colo.), he replied: “I would not say yes. It was geared toward small and rural banks.
Moderate Democrats’ opposition to new bank regulations is a sign of the difficult task facing legislation this week, introduced by Senator Elizabeth Warren, D.Mass. The bill would repeal key provisions of the 2018 bill that eased Dodd-Frank scrutiny by increasing the “too large to fail” limit to $50 billion.
Many Democrats support their 2018 votes, arguing that the government still has the tools to protect SVB’s position under existing law.
Warren stated, “Ofcourse there were tools!” “But, the 2018 law change was an invitation from Congress to the Fed to weaken any of those rules — vote for some to be eliminated and the rest to become much, much more softer than they were before.
“It is dangerous to allow regulators to not do their jobs. She said that regulators need to be told to shut the door on giant banks and to put tough tests on them.
Senator Majority Leader Chuck Schumer (D-N.Y.), who voted against 2018’s measure, was noncommittal to being asked if he supports the Warren bill. He said, “We need strong legislation and hopefully we can put together something that’s bipartisan.”
Even if the bill does get the 60 votes needed to clear the Senate, it would face a steeper climb in the Republican-controlled House.
While Democrats may be divided on the need to tighten bank regulations, Republicans who have been long the party that regulates financial institutions less are resisting any new legislation.
“It would be premature to begin talking about solutions before fully defining the problem and in eventually getting answers from regulators about why these were asleep at work,” stated John Thune (Senate Minority Whip), R-S.D.
Senator Katie Britt (R-Ala.) has firmly shut the door to creating new rules.
“No new regulations. She stated that we need to enforce the existing regulations.
Senator Sherrod Brown (D-Ohio), who chairs the Banking Committee, voted against the 2018 law and said that he would “like to see” the rules re-established. He also stated that his priorities are to work within the existing framework in order to maximize enforcement.
Brown stated, “I opposed this bill before, but we got rolled — a lot.” “And so, I’m not stupid. That is a difficult task. I appreciate those efforts and will continue to support them. However, my main focus is on the regulators in order to ensure that they do the right thing.
Brown was asked if he believed regulators had the tools necessary to stop the collapses at Silicon Valley Bank and Signature Bank. He replied: “I don’t know. This is one of the things that we want to learn. “I think that Congress and then Trump made the job harder for regulators to do what they did.” He compared it to rail companies lobbying for looser regulations before a train crashes, such as in East Palestine, Ohio.
Brown stated, “It’s such an obvious lesson in government that these strong corporations with their very efficient, well-paid lobbyists weaken the protections for public and then lo and behold something happens.”
