Washington D.C. – Be wary of revisionist history from Republicans in Congress today amid the sudden collapse of Silicon Valley Bank, “the largest U.S. banking failure since the 2008 financial crisis and the second-largest ever.”  In fact, conditions for the collapse were made perfect under Republican-sponsored, Wall Street-pushed bill signed into law by President Trump in 2018 that severely watered down risk-assessment rules for two dozen of the largest banks that collectively hold trillions of dollars in assets and received tens of billions of dollars in TARP bailout funds after the 2008 financial crisis. These banks include Silicon Valley, whose CEO lobbied hard for the Dodd-Frank roll back – which ironically led to his own bank’s demise and a questionable decision to dump millions of dollars in stock in the company just two weeks ago. 

Despite warnings at the time from consumer advocates including Accountable.US that removing Dodd-Frank safeguards invited the same kind of risky behavior that led to the financial crisis, the so-called ‘Economic Growth, Regulatory Relief, and Consumer Protection Act’ passed with unanimous Republican support after taking millions of dollars from the financial industry.

This mess was left behind by Congressional Republicans and the Trump administration who were too deep in the big banks’ pocket to care about the consequences of gutting financial industry oversight. The chickens came home to roost this week in the Republican war against Wall Street reform and consumer financial protections.

Under the Republican roll back of Dodd-Frank, major institutions like Silicon Valley that oversee trillions of dollars in assets have far less of a burden to prove they can stay standing in difficult economic times. This predictable disaster should give serious pause to the current MAGA House majority who are pursuing further roll backs of consumer financial protections after taking money hand over fist from Wall Street banks – but don’t count on it.”

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

BACKGROUND: New York Times: “Some banking experts on Friday pointed out that a bank as large as Silicon Valley Bank might have managed its interest rate risks better had parts of the Dodd-Frank financial-regulatory package, put in place after the 2008 crisis, not been rolled back under President Trump. In 2018, Mr. Trump signed a bill that lessened regulatory scrutiny for many regional banks. Silicon Valley Bank’s chief executive, Greg Becker, was a strong supporter of the change, which reduced how frequently banks with assets between $100 billion and $250 billion had to submit to stress tests by the Fed.” 

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