In the wake of SVB's collapse, it should be pointed out that it was all completely avoidable. In 2018, Donald Trump and the Republican Congress—at the behest of the banking industry—rolled back key parts of the Dodd-Frank law that protected consumers. The legislation passed the House 258-159 (with 33 Democrats joining almost all Republicans), and the Senate 67-31 (with 17 Democrats in support).
The original Dodd-Frank Act, known as the most far-reaching Wall Street reform in history, was supposed to prevent the excessive risk-taking that led to the financial crisis and create a new consumer watchdog to prevent mortgage companies and payday lenders from exploiting consumers.
Sen. Elizabeth Warren sounded the warning bell in a floor speech against the roll-back legislation, saying "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 the C.E.O.s of these banks can get a new corporate jet and add another floor to their new corporate headquarters.”
Had the GOP not weakened Dodd-Frank, Big Banks would have been subject to stronger liquidity and capital requirements to withstand financial shocks. The collapse we now see could have been predicted and prevented, and consumers' assets would have been protected.
Instead, we saw Silicon Valley Bank executives give themselves huge bonuses—hours before the federal bank regulators rushed in to take over a failing institution. They did this because, in the current financial regulatory environment, they believed that they could get away with it.
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