WASHINGTON, D.C.— Dennis M. Kelleher, Co-founder, President and CEO, issued the following statement in connection with the White House release of a Fact Sheet urging Congressional actions to strengthen accountability for senior bank executives in response to the collapse of Silicon Valley Bank (SVB):
“The Department of Justice is investigating and will undoubtedly prosecute any criminal lawbreaking at Silicon Valley Bank (SVB). But that’s not enough: regulators must have the power and authority to meaningfully, personally, and severely punish wrongdoing by directors, executives, and officers of banks that does not rise to the level of criminal conduct. That’s why we applaud the White House today for urging Congressional action to strengthen accountability for senior bank executives in response to the collapse of SVB. Regulators simply must have a full arsenal to severely punish faithless, irresponsible, and reckless bank executives, officers, and directors.
“However, the likelihood of Congressional action here is very low due to divided government and the excessive lobbying power and influence of the financial industry. That’s why the administration needs to immediately take additional actions. It needs to order the regulators to review and revise the innumerable deregulatory actions taken during the Trump administration. While the 2018 law deregulating large banks was important to the failure of SVB, it was only one part of the Trump administration’s vast, broad, deep, and dangerous deregulation juggernaut. Federal Reserve (Fed) Chair Powell and then-Vice Chair Quarles enacted more than 20 rules that significantly and dangerously deregulated and weakened banks while also attempting to gut supervision of the banks, as detailed in this Report. The same happened at the FDIC and OCC.
“Those three agencies should immediately announce that they are reviewing all those rules in light of the failure of SVB with the intent of revising them. Those agencies, with the Fed in the lead, should promptly issue Interim Final Rules (IFRs) reversing the most damaging deregulation undertaken during the Trump administration. While public comment is helpful and often required, these agencies have all the information they need from the prior public comments (including Better Markets’ comments on dozens of those rules) to reverse and revise the baseless and unwarranted deregulatory actions. Importantly, the Fed and FDIC have a ready roadmap to identify the most dangerous deregulation: 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) and the then-Director, now Chair of the FDIC Marty Gruenberg (detailed here). Their dissents from Trump’s deregulators’ actions clearly detailed why those actions were unjustified, unnecessary, and dangerous. Those dissents and the opposition comments of others like Better Markets provide ample basis for IFRs to be issued ASAP.”
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.