SVB collapse: Schumer sidesteps whether he’d support Warren bill to regulate big banks

SMajority Leader in the enate Chuck Schumer (D-NY), avoided answering questions about whether he would support a bill proposed by Senator Elizabeth Warren (D-MA). This bill seeks to reimplement Obama-era bank regulations following the election. Bank in Silicon Valley is on the verge of collapse Over the weekend

Schumer did not offer his opinion on the proposal during Wednesday’s weekly press conference, but he left the possibility open for legislation to address the issue. Banking crisis.

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“We need strong legislation, and hopefully, we can get something bipartisan done,” According to the New York senator, reporters were informed. “We need a thorough investigation as to what went wrong and hold those responsible accountable.”

Tuesday’s legislation was introduced by Warren. It would eliminate Title IV of Economic Growth, Regulatory Relief and Consumer Protection Act and restore some provisions that were used to reform the U.S. banking system following the 2008 recession. These provisions were originally passed by Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010. They were later relaxed by the Trump administration.

Warren’s legislation specifically targets Title IV provisions that raise the asset threshold to $250B for banks to regulate as “systemically important.” Warren claimed that this rollback led to deregulation and the subsequent collapse of Signature Bank and SVB, prompting a national frenzy which put strain on the stock market.

“In 2018, I rang the alarm bell about what would happen if Congress rolled back critical Dodd-Frank protections: banks would load up on risk to boost their profits and collapse, threatening our entire economy — and that is precisely what happened. President Biden called on Congress to strengthen the rules for banks, and I’m proposing legislation to do just that by repealing the core of Trump’s bank law,” Warren .

Sen. Democrats are having a hard time agreeing on the bill. They don’t know whether to repeal 2018 legislation or make stronger regulations. Republicans have rebuffed the idea.

Senate Minority Whip John Thune, R-SD, dismissed any talk of legislation as being “premature,” This is especially important before lawmakers can understand the reasons behind the collapse.

“I think that most of our members first and foremost want to have the question … answered by the regulators: What happened?” Thune made these remarks at the GOP’s weekly press conference. “How come they were asleep at the switch and didn’t see this coming? And these are pretty obvious indicators. There’s still a lot of unrealized losses on the balance sheets of banks around the country and this clearly, there were circumstances around this.”

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SVB and Signature Bank both collapsed last week. Federal intervention was necessary to stop panic by providing financial support to uninsured deposits.

SVB had announced Wednesday that it had sold $21 Billion in bonds to secure $1.8 billion in losses previously unrealized. That announcement sparked a frenzy among venture capital firms, which reportedly began advising clients to pull their money from Silicon Valley Bank — causing its stock to be thrust into a free fall.