WASHINGTON, D.C.— Dennis M. Kelleher, Co-founder, President and CEO, issued the following statement in connection with the White House announcement today calling for the reinstatement of important financial protection rules that that will protect Main Street taxpayers, families, small businesses, and community banks:
“It’s no mystery why Silicon Valley Bank (SVB) and others collapsed causing the current banking crisis: the Trump administration’s massive deregulation of banks incentivized dangerous, high-risk banking and it weakened supervision which prevented the regulators from reining in those reckless bankers, as we detailed in a recent Fact Sheet. That deregulation and under-supervision were very lucrative for the CEOs and officers at SVB and elsewhere, who pocketed tens of millions of dollars in stock and bonuses, but it was bad for Main Street taxpayers, families, small businesses, and community banks who get stuck with the bill to clean the inevitable damage from their recklessness and irresponsible actions.
“Fortunately, in stark contrast to the 2008 crash, the Biden Administration made sure to fire the banks’ directors and officers, wipe out the stockholders, and ensure that the Justice Department, the SEC, and others aggressively investigate and prosecute any violations of law. As important, the Administration is now going to reverse that baseless and dangerous deregulation to rebuild the protections that can prevent this from happening again. Everyone but the bankers, their lobbyists, and allies knows banks need more capital, liquidity, stress testing, living wills, and other basic, common-sense rules to make sure they operate in a safe and sound manner and do not pose a threat to financial stability like SVB. That’s what the Administration is proposing to do today, and we applaud them for that.
“Even more fortunately, the banking regulators at the Federal Reserve, FDIC, and OCC have a ready roadmap to identify the most dangerous deregulation that must be reversed ASAP: all they need to do is follow the many dissents of then-Fed Governor, now Chair of the President’s National Economic Council Lael Brainard (detailed here), the then-Director, now Chair of the FDIC Marty Gruenberg (detailed here), and Better Markets’ Road to Recovery Report and Fact Sheet. These don’t just detail why the Trump Administrations’ actions were dangerous, but also why they were unjustified and unnecessary. Those dissents and the detailed comments of Better Markets and others provide ample basis for the agencies to promptly issue Interim Final Rules (IFRs) that can start protecting Americans today.
“Yes, the bankers, their lobbyists, and allies are going to scream and make all sorts of baseless claims about how the sky will fall if they are properly regulated, as they always do and have been doing since the Great Crash of 1929. Their claims are false and dangerous and must be rejected. Protecting Main Street taxpayers, families, small businesses and community banks must be the priority and that’s what today’s announcement is all about. We look forward to prompt action by the agencies following up on today’s important words and directives from the White House.”
Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.