Washington D.C. – As First Republic Bank sells off its remaining assets to JPMorgan Chase after federal regulators seized the troubled bank, a recent analysis from government watchdog Accountable.US found the bank’s top executive personally awarded Congressional Republicans over $2.1 million after passing the 2018 Dodd-Frank rollback bill that gutted risk assessment rules — a move experts credit with the recent spate of instability and failures among mid-sized banking institutions. Accountable.US also found First Republic spent at least $250,000 lobbying Congress to water down Dodd-Frank’s reforms that likely could have prevented recent troubles. 

The selloff news comes on the heels of the U.S. Federal Reserve’s formal review of its own supervision and regulation of the first midsize bank to collapse last month, Silicon Valley Bank. The review found supervision failures within the Fed stemming from Trump-era regulatory changes in 2019 that loosened regulations and requirements for mid-sized banking institutions. In response, Accountable.US called for Congressional testimony under oath from former Trump-appointed Federal Reserve Vice Chair for Supervision Randal Quarles, who played a key role in the deregulatory efforts that made it easier for midsize banks to make risky bets beyond their means. Accountable.US’ analysis found Quarles quickly exploited his newfound “discretion” that Congressional Republicans gave him under the 2018 Dodd-Frank rollback law – openly discussing what was described as “substantial big-bank deregulation” under the veil of “tailoring” policy. Under Quarles’ leadership, the Fed proposed and implemented several changes to the bank stress-testing regime. 

The demise of First Republic Bank is a lesson in being careful what you wish for. The bank spent a quarter million dollars pushing Congress to nix safeguards against the kind of financial system instability that left the bank reeling – and then rewarded Republican campaigns to the tune of millions when it got its way. Republicans in Congress like Patrick McHenry that did the bidding of their financial industry mega-donors by loosening critical banking safeguards have been desperate to shirk responsibility as more chickens come home to roost. McHenry and fellow foes of consumer protection invited a culture of hands-off banking supervision during the Trump administration, which led to risky practices that ultimately caught up with mismanaged banks. There’s a straight line to trace between Republicans in Congress in the pocket of Wall Street, Trump era deregulation and failure of mid-size banks that threatens the stability of the financial system.

History shows the less oversight and regulation of the banking sector, the riskier their behavior and the greater the likelihood of another financial crisis. And yet Chairman McHenry and fellow conservatives in Congress have clearly learned all the wrong lessons from the recent bank collapses, recklessly demanding even less oversight and accountability of the industry. The MAGA House majority insists on protecting their industry donors at all costs -- even at the risk of another Wall Street meltdown at the expense of Main Street.”

Liz Zelnick, Director of Accountable.US’ Economic Security & Corporate Power.
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