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Congress made a big mistake in 2018 in deregulating Silicon Valley Bank. Now, we can undo the damage [1]
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Date: 2023-03-23
Donald Trump was president and with unified Republican support behind this deregulation it was simply a question of peeling off enough red-state Democrats to make it bipartisan. Sens. Heidi Heitkamp of North Dakota, Joe Donnelly of Indiana, Jon Tester of Montana, Claire McCaskill of Missouri, and Bill Nelson of Florida were all up for reelection—and eager to prove to folks back home that they were not those "woke liberals" Fox News tells them to hate. Supporting a conservative bill heavily pushed by the banking industry would help, they all thought.
In the short term, it worked for them politically. These senators were showered with campaign largesse (Heitkamp, Tester, and Donnelly were the three top Senate recipients of banking money in 2018), not to mention the banking industry's "thank you" ads run in their home state.
In the slightly longer term (Nov. 2018), four of these five Democrats lost reelection. Somehow, money from the banking industry did not translate into more red state votes. And in the longer term (less than five years later), Silicon Valley Bank and Signature Bank collapsed.
Raising the “too big to fail” threshold from $50 billion in assets to $250 billion reduced the oversight that these two banks got from the federal government. It allowed them to make risky moves that led to its collapse, leaving consumers and the government holding the bag.
“In 2018, I rang the alarm bell about what would happen if Congress rolled back critical Dodd-Frank protections,” said Senator Elizabeth Warren of Massachusetts. “Banks would load up on risk to boost their profits and collapse, threatening our entire economy—and that is precisely what happened."
President Biden has likewise mentioned that the banking deregulation led to the collapse of Silicon Valley Bank and Signature Bank. So now, it's really just a question of gathering the support to pass legislation to prevent this from happening again.
The Secure Viable Banking Act, sponsored by Sen. Warren and Rep. Katie Porter, would restore these key Dodd-Frank protections—preventing banks from dangerously playing with our money—but it won't be easy to pass it in the current Congress.
So can constituent pressure move things? Back in Jan. 2015, Wall Street tried to deregulate Dodd-Frank with help from a few House Democrats. Daily Kos mobilized their constituents to make angry phone calls, which was very effective.
Regardless of what side your members of Congress were on in 2018: a Democrat like Warren who knew it was a bad idea, a Democrat like Kyrsten Sinema (who voted "yes" in the House and now serves in the Senate), or a Republican, they need to hear from you today. The collapse of Silicon Valley Bank and Signature Bank were completely avoidable. And it's okay to admit you were wrong in 2018. Now, it's time to pass the Secure Viable Banking Act.
Sign and send the petition: Banks cannot gamble with our money. Bring back tougher regulations by passing the Secure Viable Banking Act.
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[1] Url:
https://www.dailykos.com/story/2023/3/23/2159657/-Congress-made-a-big-mistake-in-2018-in-deregulating-Silicon-Valley-Bank-Now-we-can-undo-the-damage
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