Just one week before Silicon Valley Bank collapsed, Tim Scott wrote a letter asking for rules and regulations on similar banks to be loosened – and new reporting from Yahoo News out this morning shows Scott has long worked to dismantle some of the key components of the Dodd-Frank Act.
In case you missed it:
Yahoo! News: GOP senators pushed to keep banking rules loose one week before SVB collapse
- The stunning events around Silicon Valley Bank of California and Signature Bank of New York come after years of moves in Washington to ease capital requirements on smaller and regional banks — including one that came just last week.
- In a letter dated March 3 to Federal Reserve Chair Jerome Powell, Sen. Tim Scott (R-SC), the ranking member of the Senate Banking Committee, … expressed concern that an ongoing Federal Reserve review may go beyond a 2018 law that eased regulations on smaller banks and “may unjustly increase capital requirements and have a chilling effect on market making activities and availability of financial services.”
- Within days, the banking sector saw the second- and third-largest bank failures in history.
- A spokesperson for Sen. Scott stood by the letter in a statement to Yahoo Finance on Monday, saying that ”capital must continuously be scrutinized to ensure it is risk based and is tailored to the bank’s size, scope, and activities. What’s happening with Silicon Valley Bank highlights why we cannot have a one-size-fits-all approach.”
- The argument was notably an echo of how Greg Becker, then the CEO of Silicon Valley Bank, lobbied for what eventually became the 2018 law, saying in 2015 that tighter rules are “not appropriate for SVB and our peers.” Democrats also immediately jumped on the letter, with Sen. Elizabeth Warren (D-MA) saying the push for easing rules came “at exactly the wrong time.”
- “Unfortunately, the last administration rolled back some of these requirements. I’m going to ask Congress and the banking regulators to strengthen the rules for banks to make it less likely this kind of bank failure will happen again,” Biden said Monday morning.