.JohnCassidy writes about First Republic Bank’s sale to JPMorgan Chase, and why Congress should restore the Dodd-Frank regulatory standards for all banks with more than $50 billion in assets.
“rolls back the crippling Dodd-Frank regulations that are crushing community banks and credit unions nationwide,” Trump crowed, echoing the line of a well-funded bank lobby. A fact sheet put out by the G.O.P.-controlled Senate said the act “modernizes financial regulations in a way that makes sense for small financial institutions.” Even some Democratic senators endorsed this idea: seventeen of them voted for the bill.
Freed from this strict regime, S.V.B. expanded even more rapidly, tripling its assets between 2019 and 2021, from seventy-one billion dollars to two hundred and eleven billion. As the favored bank for many Silicon Valley startups, it also benefitted from the tech boom during the. If a bank grows as quickly as S.V.B. and First Republic did in recent years, it is often a warning sign to regulators, but S.V.B.
In an interview with CNN on Friday, Quarles said that returning to the stricter regulatory regime that was in place before passage of the E.G.R.R.C.P.A. “would not have made any difference” in the fate of S.V.B., which he attributed primarily to a depositors’ panic that was sparked by communications on social media. For a longtime champion of reducing regulatory burdens, that was a convenient explanation, but there may be an element of truth in it.
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