As the House Financial Services Committee gears up for this week’s hearing on the collapse of Silicon Valley Bank, Chairman Patrick McHenry has vowed the committee will “get to the bottom” of the bank’s failure.
However, as he and his Republican colleagues try to pin the blame on everyone from the Federal Reserve and the FDIC to Twitter, it’s clear McHenry is desperately deflecting from the real culprit behind the collapse: the Republican war against Wall Street reform and consumer financial protections.
During the Obama administration, the Dodd-Frank Wall Street Reform and Consumer Protection Act was passed to prevent the type of risky banking behavior that triggered the 2008 financial crisis. But in 2018, Congressional Republicans and the Trump administration worked to pass a Wall Street-endorsed rollback that severely watered down risk-assessment rules for two dozen of the largest banks collectively holding trillions of dollars in assets – despite warnings that removing the safeguards would invite back the same reckless decision-making, sparking another set of bank failures.
McHenry was never shy about his support for the bill, which he deceivingly called a “win for consumers” and an “important first step to undo Dodd-Frank.” Behind his pride in playing “an active role in drafting [the] bill” – the influence of $5 million in career campaign cash from the financial industry, including $10,000 from SVB’s Political Action Committee.
Now, just five years later, experts agree that McHenry’s efforts to deregulate the industry laid the groundwork for the collapse of Silicon Valley Bank. Under laxer oversight in the following years, SVB raised their top three executives’ total compensations by double-digit percentages — with its CEO seeing a 30% increase by 2022. In addition, just months after President Trump signed S. 2155 into law — SVB’s holding company, SVB Financial Group, announced a new $500 million stock buyback program that rewarded wealthy investors before they charged consumers over $462.7 million in junk fees in the last five years alone.
Yet, McHenry’s ties to Silicon Valley Bank aren’t the only industry connections hurting his credibility. Last week, Bloomberg reported that Signature Bank threw McHenry a high-dollar fundraiser at their offices just 10 days before the bank’s collapse. While Chairman McHenry’s staff claims donations from the Signature Bank fundraiser event “won’t be processed,” Accountable.US’ review found Signature employees and executives have donated over $400,000 in career contributions to McHenry.
Still, McHenry continues to double down on his view that the Dodd-Frank deregulations have nothing to do with the banks’ collapses. From raising concerns that the Fed was unfairly looking at capital requirement tests to blaming Twitter for “fuel[ing]” the bank runs, McHenry is ready to peddle any excuse available to distract from his party’s role in destabilizing the banking industry.
As he leads this week’s hearing, there is no doubt he will continue to use his platform to fight for his Wall Street donors and extreme economic agenda over what’s best for working families and the economy. Read McHenry’s MAGA Economics profile to learn more about his industry-funded efforts to protect corporate greed.