In the wake of the collapse of two large banks, Sen. Martin Heinrich, D-N.M., and other Democrats are seeking to repeal a 2018 law that reduced oversight and capital requirements for certain financial institutions.
The legislation would seek to repeal Title IV of the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018. The bill was introduced after the collapse of Silicon Valley Bank and Signature Bank.
Heinrich’s office said the senator in 2018 warned that lawmakers were rolling back so called Dodd-Frank protections by raising the threshold at which point Enhanced Prudential Standards, or EPS, apply from $50 billion to $250 billion banks. SVP, for example, had just over $200 billion in total assets, according to the Federal Deposit Insurance Corporation.
“I warned Congress in 2018 that President Trump’s regulatory rollback would put the health of the banking system at risk, and now here we are,” Heinrich said in a prepared statement. “While I’m glad the Biden administration and regulators acted quickly to ensure small businesses and depositors didn’t take the brunt of this failure, this disaster could have been prevented. That’s why I’m joining Senator (Elizabeth) Warren and our colleagues to introduce legislation to restore important guardrails and strengthen our banking system.”
The Secure Viable Banking Act was introduced by Warren, D-Massachusetts, and Rep. Katie Porter, D-California. No Republicans are supporting the measure.
“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.”