Elizabeth Warren and Katie Porter are taking the first step in repealing the Trump-era banking law they blamed for Silicon Valley Bank's collapse
- NBC first reported on Tuesday that Sen. Warren and Rep. Porter are introducing a bill to repeal a 2018 banking law.
- The law rolled back provisions in the Dodd-Frank Act, weakening oversight over banks.
Democratic lawmakers are introducing legislation intended to stop a failure like Silicon Valley Bank (SVB) from happening again.
NBC first reported on Tuesday that Massachusetts Sen. Elizabeth Warren and California Rep. Katie Porter led 50 of their Democratic colleagues in introducing legislation to repeal a Trump-era law that rolled back parts of the 2010 Dodd-Frank Act, which was passed in the aftermath of the 2008 financial crisis to protect consumers from abusive banking behavior.
Specifically, some Democrats joined Republican lawmakers in 2018 in passing a bill that took away oversight measures for midsize banks like SVB by raising the threshold for regulation standards — essentially assessing how a bank would respond to financial shocks, like an increase in interest rates — from $50 billion to $250 billion. This meant that the vast majority of banks with under $250 billion in assets — including SVB — wouldn't face increased oversight.
—Elizabeth Warren (@SenWarren) March 14, 2023
Warren and Porter blamed the Trump-era rollbacks for SVB's abrupt shutdown on Friday, saying that if stricter regulations had been in place, the bank's collapse could have been prevented.
"In 2018, I rang the alarm bell about what would happen if Congress rolled back critical Dodd-Frank protections: banks would load up on risk to boost their profits and collapse, threatening our entire economy — and that is precisely what happened," Warren said in a statement. "President Biden called on Congress to strengthen the rules for banks, and I'm proposing legislation to do just that by repealing the core of Trump's bank law."
The Democrats' legislation would restore the 2010 threshold for bank regulation, according to the press release.
Sen. Bernie Sanders also said on Monday that SVB's failure was a "direct result" of the 2018 legislation. Some of the Democratic lawmakers who voted for the 2018, like Virginia Sen. Mark Warner, said they still stand by their vote. Sen. Joe Manchin told CNN on Tuesday, that although he voted for the bill, he looks at it "differently now" and would support more regulations as long as it did not lead to overregulation.
"Americans deserve to know their money is safe when they deposit it in the bank," Porter said in a statement. "In 2018, politicians rolled back critical regulations protecting Americans' deposits—ignoring warnings from financial experts in favor of Wall Street special interests. I'm calling on Congress to restore common-sense guardrails that keep corporate greed in check and restore confidence in our financial system."
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