SVB collapse: Progressives blame 2018 rollback of Dodd-Frank for bank failures
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PTwo U.S. banks collapsed over the weekend due to a 2018 bill which reversed regulations that were in place following the 2008 financial crisis.
Federal regulators shut down Silicon Valley Bank released its Friday announcement on Friday. It came two days after America’s 16th-largest federally insure bank, said it needed to raise $2.2 billion more to remain solvent. This sent the stock price plummeting more than 60% in less than 48 hours. They also made an announcement Sunday evening The closure of Signature Bank reveals plans to Make customers the financial institutions. Signature Bank is the third-largest bank failure in U.S. history, while Silicon Valley Bank is the second.
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“No one should be mistaken about what unfolded over the past few days in the U.S. banking system: These recent bank failures are the direct result of leaders in Washington weakening the financial rules,” Sen. Elizabeth Warren (D.MA) wrote in New York Times op-ed Published Monday.
Warren noted that SVB was among many banks that lobby Congress and the then-President Donald Trump in order to weaken Dodd-Frank Act. This Act established banking rules to avoid another financial meltdown. With the support of both sides, the regulations were reduced in 2018.
“Had Congress and the Federal Reserve not rolled back the stricter oversight, SVB and Signature would have been subject to stronger liquidity and capital requirements to withstand financial shocks. They would have been required to conduct regular stress tests to expose their vulnerabilities and shore up their businesses,” She wrote. “But because those requirements were repealed, when an old-fashioned bank run hit S.V.B., the bank couldn’t withstand the pressure — and Signature’s collapse was close behind.”
Sen. Bernie Sanders (I-VT), which also blamed Trump-era legislation for the collapse SVB, stated in a Sunday declaration: “Let’s be clear. The failure of Silicon Valley Bank is a direct result of an absurd 2018 bank deregulation bill signed by Donal
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