Biden moves to roll back Trump-era bank deregulation
Christian Datoc
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President Joe Biden is calling on independent federal regulators to reinstate “commonsense safeguards” rolled back by former President Donald Trump that administration officials say are partially to blame for the recent failures of Silicon Valley Bank and Signature Bank.
After stepping in to protect assets at Silicon Valley Bank, the president said he was committed to “continuing our efforts to strengthen oversight and regulation of larger banks so that we are not in this position again,” and White House officials claimed that the reforms Biden requested Thursday would help community banks avoid failing in future.
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“These are independent regulatory agencies, and they’re going to take the steps that they believe are advisable based on their analysis of the situation,” one senior administration official told reporters Thursday. “We have obviously had a number of conversations with each of these agencies throughout since the beginning of the administration, but also over the last few weeks to discuss the kinds of changes that they believe are necessary.”
Biden is specifically calling for four specific reforms, undoing Trump-era deregulation for banks with assets ranging from $100 billion to $250 billion:
Reinstating liquidity requirements and enhanced liquidity stress testing Requiring annual supervisory capital stress tests Requiring comprehensive resolution plans or “living wills” Strengthening strong capital requirements for banks “at an appropriate time after a considerable transition period”
Furthermore, Biden will call on regulators to make the following new reforms to “ensure strong supervision,” including:
Reduce the transition periods for applying commonsense safeguards to growing banks that are projected to exceed the $100 billion threshold Strengthen supervisory tools, including stress testing, to make sure banks can withstand high interest rates and other stresses Expand long-term debt requirements to a broader range of banks Ensure that the costs of replenishing the Deposit Insurance Fund after these recent bank failures are not borne by community banks
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“Our view is that the change that we’re discussing can be accomplished under existing law,” the administration added. “Our view is that Americans, the country, and the economy benefit from having a robust community banking system and that community banks play a really important role in providing access to credit, especially small business credit in a lot of communities.”