WASHINGTON — A group of Democrats led by Sen. Elizabeth Warren of Massachusetts and Rep. Katie Porter of California will introduce legislation Tuesday to restore banking regulations that were undone under then-President Donald Trump in 2018, seeking to fix what they say was the cause. of the collapse of Silicon Valley Bank.
He legislationFirst reported by NBC News, it would repeal the centerpiece of a law passed in a bipartisan fashion by the Republican-led Congress in 2018 that eased Dodd-Frank financial regulations on midsize banks by raising the threshold of «too big.» to fail» from $50 billion in assets to $250 billion.
“In 2018, I sounded the alarm about what would happen if Congress repealed critical Dodd-Frank protections: Banks would take on risk to boost their profits and collapse, threatening our entire economy, and that’s precisely what happened. Warren. saying. «President Biden called on Congress to strengthen the rules for banks, and I am proposing legislation to do just that by repealing the core of Trump’s banking law.»
Warren-Porter’s bill would restore the threshold set in 2010 for enhanced capital requirements and stress tests in a bid to prevent future failures like those of SVB and Signature Bank last week.
The legislation will be formally introduced with a number of original cosponsors, according to Warren’s office, including Sens. Tammy Baldwin, D-Wis., and Bob Casey, D-Pa., who face re-election in competitive states in 2024, as well as Reps. Pramila Jayapal, D-Wash., chair of the progressive caucus, and Ro Khanna, D-Calif., who represents the SVB district, and Sen. John Fetterman, D-Pa., who serves with Warren on the Banking Committee.
Porter, who is running for the Senate seat held by Senator Dianne Feinstein in a mob race against several prominent House Democrats, said the bill would «restore the common-sense barriers that keep corporate greed and corporate greed in check.» would restore confidence in our financial system.»
Another cosponsor of the bill is Rep. Ruben Gallego, D-Ariz., who is running for the Senate seat held by Sen. Kyrsten Sinema, I-Ariz.; Sinema voted in favor of the 2018 legislation when she was a member of the House, while Gallego opposed it.
The new bill is likely to reignite divisions among Democrats dating back to the 2018 fight. At the time, Warren lobbied senators to block the GOP-led deregulation bill, but 17 Democrats they voted with the Republicans, giving them enough support to break a filibuster and pass it. Defenders argued that many small and midsize banks were being stifled by enhanced regulation passed in the wake of the 2008 financial crisis and could do better without it.
Among the banks affected by regulatory easing in the Trump-era move was Silicon Valley Bank, which joined a number of midsize and community banks lobbying for such relief at the time. Warren-Porter’s bill would not repeal the entire 2018 law, but rather the core of it, Title IV, called «Adjustment Regulations for Certain Bank Holding Companies,» which established asset limits for which banks they were subject to federal scrutiny.
Some of the 2018 law’s Democratic supporters, including Sen. Mark Warner of Virginia, say it set appropriate levels of regulation for midsize and community banks.
Sen. Jeanne Shaheen, DN.H., who voted in favor of the 2018 bill, said Tuesday that she stands by her vote.
“I think it’s early. We need to complete the investigation of what really happened at Silicon Valley Bank. All the regulation in the world is not going to fix bad management practices, and that seems to be one of SVB’s problems,” Shaheen said. «But depending on the result, I think it’s appropriate that we take a look at what we did and see if it still holds up.»
The bankruptcy of SVB has reopened the debate on financial regulation. It’s far from clear that the Warren-led bill can get the 60 votes needed to advance in the Senate. And if it does, it would be a harder sell in the House, which is controlled by Republicans who voted for the deregulation measure in 2018.
Republicans don’t blame bank failure on lack of regulation: House Speaker Kevin McCarthy of California tweeted on Tuesday that President Joe Biden’s spending caused «record inflation and rapid interest rate hikes that broke family budgets and banks as well.»