Biden goes big on banking regulations as Republicans push back

PJoe Biden, resident of Silicon Valley Bank is trying to turn the Bank’s collapse into a legislative victory. But he will be met with plenty of Republican opposition.

Last week, the president called for the reinstatement of banking regulations that were repealed five years ago and sought new sanctions for bank executives whose operations failed.

SVB COLLAPSE BANK CRISIS BECOMES ANOTHER BIDEN VS. TRIUMPWAR AHEAD OF 2024

“I’m firmly committed to accountability for those responsible for this mess,” Biden said Friday. “No one is above the law — and strengthening accountability is an important deterrent to prevent mismanagement in the future.”

Democrats echo Biden’s call on Capitol Hill.

Representative Katie Porter (D-CA), Sen. Elizabeth Warren (D-MA), introduced legislation to reverse a partial Dodd-Frank Act rollback Congress approved in 2018. While Sen. Bernie Sanders, I-VT, laid the blame on Donald Trump

“Let’s be clear. The failure of Silicon Valley Bank is a direct result of an absurd 2018 bank deregulation bill signed by Donald Trump that I strongly opposed,” Sanders said. Biden also blamed Sanders for his former presidency.

Republicans argue that there is more to this story than just the cause and effect of loosening regulations. Banks fail.

For one, 17 Senate Democrats approved the rollback on midsized bank branches, while 33 House Democrats did the same. Republicans argue that there are existing regulations that should have flagged SVB as a problem and that better enforcement is the way to go.

“This bank was supervised by the Federal Reserve and the state of California — SVB’s failure is the result of mismanagement and failed supervision,” According to a spokesperson for Senator Tim Scott (R.SC), “Regulators said SVB was ‘idiosyncratic.’ If that’s the case, how did they miss the idiosyncrasies and the risk? If this is such an outlier in the system, why wasn’t action taken? Regulators failed to do their job with regards to SVB, and if regulators can’t do their job with what the law gives them now, why is giving them more regulations the better route?”

Republicans attack high inflation. The Federal Reserve has been battling it with aggressive interest rate increases that contributed to the collapse of SVB. Republicans point to Biden and the $1.9 trillion American Rescue Plan Act that he signed shortly after he assumed office for driving inflation from 1.4% in the month he was elected to 9.1% last summer. This prompted the rate hikes.

Conservatives argue that banks can work around any new regulations. They also question the necessity of government interference in the sector.

“When any other business is reckless or irresponsible, we allow them to go bankrupt,” EJ Antoni, a Heritage Foundation researcher, said the following: “I’m not sure why we treat banks differently. And I’d say the fact that we do is partly why we keep having problems in the banking industry. These people know that when things go South, they will get bailed out.”

Biden calls for sanctions on bank executives who fail to pay their dues. Friday’s statement by Biden called on regulators to be able to recover compensation from executives and impose civil penalties.

The accompanying fact sheet mentioned that the SVB CEO had sold more than $3 million in shares just before the collapse, as an example of activity that should be regulated.

While the president is calling for Congress to act, he may also try to do things his way. Biden’s administration has been proactive in taking steps on its own to address everything from student loans to child-care to gas stoves and gig workers.

Biden might have difficulty getting his ideas through with skeptical Republicans in the House of Representatives, and conservatives dominating Supreme Court.

However, the president is winning the battle to reach voters, according to Brad Bannon, Democratic strategist.

“It’s a great message from the Biden administration about cause and effect — you deregulate banks, they start blowing up,” Bannon said. “The reality is, besides Republicans, most Americans favor the strict regulation of banking institutions.”

CLICK HERE TO READ MORE ABOUT THE WASHINGTON EXAMINER

Bannon claims that while inflation was a significant factor in the Fed raising interest rates and in the SVB’s collapse, it is not the only reason. He also says that most voters will be more open to regulation arguments.

“It speaks to populism. It speaks to big businesses failing the public,” said Bannon. “The Republicans failed the public by deregulating banks. This is a battle that Joe Biden definitely wants to fight with House Republicans.”