Banking Deregulation: A Contributing Factor to the Banking Crisis

A bipartisan coalition in 2018 voted to roll back portions of the 2010 Dodd-Frank law, which aimed to prevent a future financial crisis. The changes, driven by a lobbying campaign that cost tens of millions of dollars, have now been blamed for contributing to the recent collapse of Silicon Valley Bank and Signature Bank. The rollback included provisions that lifted the threshold for banks facing strict oversight, effectively carving out mid-size banks from more stringent regulation.

Key Takeaways:

• The 2018 rollback of the Dodd-Frank law, aimed at reducing consumer risk and forcing safer lending practices, has been blamed for contributing to the recent banking crisis.
• The bipartisan coalition that voted for the rollback included Senators Jon Tester (D-MT), Joe Donnelly (D-IN), Heidi Heitkamp (D-ND), and Mike Crapo (R-ID), among others.
• The lobbying campaign for the rollback cost tens of millions of dollars and drew hundreds of lobbyists.
• The bill was sold to the public as a form of regulatory relief for overburdened community banks, but it also included provisions that drastically curtailed oversight.
• Specifically, the legislation lifted the threshold for banks that faced a strict regimen of oversight, including mandatory financial stress testing.
• Silicon Valley Bank and Signature Bank executives lobbied on behalf of the 2018 rollback, and less than a month after the bill passed, Senator Jon Tester met with Greg Becker, the CEO of Silicon Valley Bank.
• Lobbyists with the Franklin Square Group, retained by Silicon Valley Bank, donated $10,800 to Tester's campaign.
• Americans for Financial Reform, a left-leaning financial sector watchdog group, has drawn a direct line between the deregulation of the Trump period and the recent banking chaos.

Statistics:

• Tens of millions of dollars: the cost of the lobbying campaign supporting the 2018 rollback of the Dodd-Frank law.
• Over $400 million: the amount spent by companies and trade groups specifically mentioning the legislation in 2017 and 2018.
• 60-vote filibuster threshold: the hurdle cleared by the bipartisan coalition for the 2018 rollback.
• 32 meetings: the number of meetings between Senator Jon Tester and Montana bank officials.
• $10,800: the amount donated by lobbyists with the Franklin Square Group to Tester's campaign.
• Less than a month: the time between the Senate passage of the bill and Senator Tester meeting with Greg Becker, the CEO of Silicon Valley Bank.

Sources:

• The Associated Press
• Carter Dougherty, a spokesperson for Americans for Financial Reform
• Cam Fine, who led the Independent Community Bankers of America trade group during the legislative push
• The Senate banking committee, led by Senator Mike Crapo
• Senator Jon Tester's office schedule, posted on his Senate website
• Lobbying disclosures, analyzed by The Associated Press
• Benjamin Fanjoy, The Associated Press file photo