A worker tells people that the Silicon Valley Bank (SVB) headquarters is closed on March 10, 2023 in Santa Clara, California. Silicon Valley Bank was shut down on Friday morning by California regulators and was put in control of the U.S. Federal Deposit Insurance Corporation. Prior to being shut down by regulators, shares of SVB were halted Friday morning after falling more than 60% in premarket trading following a 60% declined on Thursday when the bank sold off a portfolio of U.S. Treasuries and $1.75 billion in shares to cover declining customer deposits. (Photo by Justin Sullivan | Getty Images)
The recent bank crisis that saw the collapse of the Silicon Valley and Signature Banks is now being blamed on the deregulation bill passed by Congress and signed into law by President Trump in 2018. Just to keep the record straight, the measure was supported by numerous Democrats as well as Republicans, including Montana’s Sens. Democrat Jon Tester and Republican Steve Daines.
Both claim they voted for the bill that rolled back the Dodd-Frank banking regulation law to protect Montana’s small banks. But in fact the “small bank cut-off” for stricter federal oversight is a whopping $250 billion in assets.
One might well wonder why Tester and Daines thought removing federal oversight would help Montanans. After all, anyone with money in the bank naturally wants confidence that their deposits are fully protected against a crash.
Both Daines and Tester have taken significant campaign donations from the banking industry. And Tester sits on the Senate Banking Committee, where he is continually wooed by banking lobbyists. Not that any of that is unusual, as evidenced by Senate Majority Leader Chuck Schumer, (D-NY) and Maxine Watters (D-CA), who rushed to return donations received from Silicon Valley Bank’s operatives, saying they would be “donated to charity.”
Cutting to the chase was Massachusetts Democrat Senator Elizabeth Warren, who established the Consumer Financial Protection Bureau and led the Congressional Oversight Panel of the Troubled Asset Relief Program. Highly respected for her deep knowledge of the banking industry, Warren laid it out bluntly. “Connect the dots. The 2018 rollback permitted the banks to take on more risks in order to boost their profits. So what did they do? They took on more risks, boosted their profits, gave their executives big bonuses, and then blew the banks up.”
Now legislation has been introduced to restore the former Dodd-Frank regulatory oversight and “resurrect the threshold set for stress tests and capital rules that had been eased for small and mid-sized banks in light of the recent collapse of Silicon Valley Bank and other institutions.”
Some day we may learn, but our current legislature is again on a deregulation run, this time on local zoning and environmental regulations. And so the merry-go-round continues until of course, it crashes…which is almost the inescapable result of letting greed run wild while prudence gets the boot.
George Ochenski is a longtime Helena resident, an environmental activist and Montana’s longest-running columnist.
Our stories may be republished online or in print under Creative Commons license CC BY-NC-ND 4.0. We ask that you edit only for style or to shorten, provide proper attribution and link to our website. AP and Getty images may not be republished. Please see our republishing guidelines for use of any other photos and graphics.
George Ochenski