[Congressional Record Volume 169, Number 47 (Tuesday, March 14, 2023)]
[Senate]
[Pages S764-S765]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]



                 Silicon Valley Bank and Signature Bank

  Ms. WARREN. Mr. President, on Friday, we experienced the second 
largest bank failure in our Nation's history. And make no mistake, this 
failure was the direct result of leaders in Washington weakening 
financial rules.
  In the aftermath of the 2008 financial crisis, Congress passed the 
Dodd-Frank Act to protect consumers and to ensure that big banks could 
never again take down the economy and destroy millions of lives.
  Since then, Wall Street executives who hated the whole idea of the 
bill spent millions to keep it from becoming law and, after it passed, 
spent millions more to try to weaken it.
  In 2018, the big banks won. With support from both parties, President 
Trump signed into law a law to roll back critical parts of Dodd-Frank. 
Now, I fought against these changes. On the eve of the Senate vote in 
2018, I warned from right here on the Senate floor that ``Washington is 
about to make it easier for the banks to run up risk, make it easier to 
put our constituents at risk, make it easier to put American families 
in danger, just so that the C.E.O.s of these banks can get a new 
corporate jet and add another floor to their new corporate 
headquarters.''
  I wish I had been wrong, but last week, the FDIC was forced to rush 
in to take over two failing banks--Silicon Valley Bank and Signature 
Bank--and then take extraordinary actions to protect those banks' 
customers and prevent the contagion from spreading throughout the 
economy.
  Both SVB and Signature Bank suffered from a toxic mix of poor risk 
management and weak supervision. If Congress and the Federal Reserve 
had not rolled back key provisions of Dodd-Frank, these banks would 
have been subject to stronger liquidity and capital requirements to 
help withstand financial shocks. They would have been required to 
conduct regular stress tests to expose their vulnerabilities and shore 
up their businesses. They would have had a more aggressive regulator 
standing at their shoulder, looking more closely at every part of the 
banks' business. But because those stringent requirements were taken 
out of Dodd-Frank, when an old-fashioned bank run hit SVB, the bank 
could not withstand the pressure.
  Shortly after that, Signature Bank collapsed, and to fight back the 
risk of contagion and to protect the banking system, the Federal 
Government once again was called on to take extraordinary measures--the 
kind of measures that Dodd-Frank was originally supposed to protect us 
against.
  These threats should never have been allowed to materialize, and now, 
we must prevent them from occurring

[[Page S765]]

again by reversing the dangerous bank deregulation of the Trump era.
  On Monday, President Biden called on Congress and regulators to 
reverse the Trump-era deregulation and ``strengthen the rules on banks 
to make it less likely that this kind of bank failure will happen 
again.'' The President is right, and that is why today, on the 5-year 
anniversary of having weakened Dodd-Frank, I am introducing 
legislation, along with 15 of my colleagues--including the Presiding 
Officer, including my colleague from Vermont--to reverse the mistakes 
that Congress and President Trump made 5 years ago when they rolled 
back a portion of Dodd-Frank.
  This is what my legislation does:
  First, it repeals section 401 of the Economic Growth, Regulatory 
Relief, and Consumer Protection Act. This will restore strong Fed 
oversight of some of the Nation's largest banks, which together hold 
trillions of dollars in assets. Stronger oversight will help protect 
our economy from heightened risk. It is absolutely essential that we 
demand stronger, not weaker, oversight of these multibillion-dollar 
banks.
  Second, my bill repeals section 402 of the 2018 law. That section 
slashed the capital requirements for large, systemically significant 
custody banks. Big banks cannot be trusted with lower capital 
requirements that degrade their ability to withstand financial shock.
  Finally, my bill repeals section 403, which made it easier for giant 
banks--those much larger than SVB--to weaken liquidity requirements by 
adding municipal debt to the definition of ``high-quality liquid 
assets,'' particularly because such debt is actually not very liquid at 
all.
  Now, there are a lot more changes we need to make to our banking 
laws. There are many other provisions in the 2018 law that I oppose. 
But today I remain focused on exactly the weakened rules that permitted 
banks like SVB and Signature to load up on risks, run up their profits, 
pay their executives giant bonuses, and eventually blow the banks to 
pieces.
  I recognize legislation won't fix everything. For 5 years, Jay Powell 
has overseen a deregulatory effort at the Federal Reserve Bank for 
banks like SVB. In 2021, I asked him if he could name a single--a 
single--regulation on banks that he thought should actually be 
strengthened instead of weakened, and he could not.
  Preventing further crises will require a complete 180-degree 
turnaround from the Fed starting immediately. This bill will address 
the immediate issue in front of us--an explosion of risk in large 
financial institutions like SVB that have been inadequately supervised 
and regulated for the last 4 years--and it will show Americans across 
the country, in the wake of this disaster, that Congress is capable of 
acting quickly and decisively to make sure that a serious problem 
doesn't get worse--a lot worse.
  The bank failures our Nation experienced this weekend were entirely 
avoidable if Congress and the Fed had done their jobs and kept strong 
oversight of big banks in place. Now, we must act quickly to prevent 
the next crisis by repealing the dangerous Trump-era provisions that 
made banks weaker.
  I yield the floor.
  The PRESIDING OFFICER. The majority leader.

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