Did Donald Trump’s Reforms Help SVB’s Collapse?

Amid the collapse of Silicon Valley Bank (SVB)And some analysts assert that there is a violation of the financial regulations of the government of the former Republican president Donald Trump may have contributed to this situation.

Although largely unknown outside of California’s Silicon Valley tech corridor, SVB has been the benchmark financial institution for emerging healthcare and technology companies for decades from the state. One of the 20 largest banks in the United Stateshad more than $200 billion in assets at the end of last year, according to CNN.

but, As of Friday, SVB was in free fall When customers started a journey from the enterprise, driven by higher interest rates and other factors, resulting in ra chain reaction that threatened to sink the enterprise It leaves its clients in financial peril.

On the heels of Friday’s bank run, some reports indicated that Trump backtracked on banking regulations may have him Weaken SVB’s ability to manage risk associated with interest rates.

in 2018Trump, according to the New York Times, signed an agreement The law that removed regulatory requirements for regional banks with assets of less than $250 billion.

Under the new rules, These institutions no longer have to undergo “stress tests” by the Federal Reserve And that’s it They were not required to keep a certain amount of cash on hand To hedge against the effects of financial shocks, the newspaper reported.

The Times indicated in its report that the bill had been supported SVB CEO Greg Baker. Baker was Lobbying congressional lawmakers to reduce regulation – Subjecting some banks to further scrutiny, and clarifying that SVB had a “low risk profile for our activities and business model”.

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This Saturday, it was also learned that Baker sold his shares in SVB two weeks before the crash on Friday.

By 2018, yesYour bank spent nearly $500,000 lobbying for Trump’s changes It eventually became law, according to The Lever, an investigative news outlet.

The rules reversed by law were first introduced in 2010 with the Dodd-Frank Wall Street Reform and Consumer Protection Act, A comprehensive reform law was signed into law by former President Barack Obama to address problems in the financial sector arising from the 2007-2008 law. The global financial crisis and the Great Recession.

As the businessman and former economic adviser to Obama pointed out in a tweet on Saturday, Robert WolfOriginally, the Dodd-Frank Act Banks required more than $50 billion in assets will be subject to stress tests.

after running, California regulators shut down the SVB It handed over control to the Federal Deposit Insurance Corporation (FDIC). Since then, it has been reported that the bank did not appoint a chief risk officer in the months leading up to Friday’s crash and failed to secure about 90 percent of its deposits.

Aileen Morales

"Beer nerd. Food fanatic. Alcohol scholar. Tv practitioner. Writer. Troublemaker. Falls down a lot."

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