What to Know About Trump-Era Bank Deregulation and Bank Failures
With the recent failure of two midsize banks, some Democrats have blamed deregulation championed by then-President Donald Trump in 2018. While the law did reduce oversight of small and midsize banks, experts are divided over whether deregulation in 2018 ultimately caused Signature and Silicon Valley Bank to collapse.
Silicon Valley Bank, the 16th largest bank in the U.S. by assets, specialized in meeting the credit needs of technology startup companies and venture capital firms. Experts say it got into trouble because of large unrealized losses on government securities, which became a problem when the Federal Reserve raised interest rates and the value of securities dropped.
“When people started asking for their funds last week, SVB faced a liquidity crisis,” Liz Peek wrote for Fox News. “Their holdings had shrunk in value, so they tried to raise new capital by selling stock and preferred shares to tide them over. Going to public markets instead of private lenders was a mistake. Depositors were spooked and rushed to claim their funds, causing a bank run and the shuttering of SVB.”
On March 10, federal regulators took control of SVB’s assets, making it the second-largest bank failure since at least 2001. Two days later, regulators took control of another failing bank, Signature Bank, which was heavily involved in the cryptocurrency sector.
In from the White House on March 13, President Joe Biden assured that the federal government would protect the money customers had deposited with the banks. Any money lost would not be borne by taxpayers, he said, but rather would be covered by fees banks pay into the federal . (William Luther, director of the American Institute for Economic Research’s Sound Money Project, the New York Post that while banks pay the
