You know what really bothers me about Republicans? And no, it’s not that they still haven’t microchipped Louie Gohmert even though he keeps running into the woods without his collar. It’s that they keep playing this cynical game wherein they deregulate things and otherwise weaken government’s ability to prevent disasters, and when their landmines blow up under a Democratic president’s watch, they’re quick to point fingers—assuming they haven’t blown them all off with unregulated fireworks in GOP-controlled red states.
So you get rail disasters that are blamed on the current administration, even though Republicans have giddily rolled back safety regulations at every opportunity. Or you get a Great Recession brought on by financial industry deregulation, and when the economy doesn’t recover fast enough—in large part because Republicans are deliberately slowing it down—conservatives blame the new Democratic president for the mess. Which, to be clear, is a little like scapegoating the mayor of East Palestine, Ohio, for the Norfolk Southern rail disaster because his street crews haven’t swept up the dead birds quite fast enough.
Well, now another bank has failed, and conservatives—like the always lying Tucker Carlson—appear poised to lay this one at the feet of Democrats, too.
But we can’t let them. Because deregulation is, for the most part, their thing—and when stuff blows up because common-sense regulations are no longer in place, they don’t get to come back and say, “Yeah, I cut the brakes on the car, but come on now—you were driving!”
A recent New York Times story on the Silicon Valley Bank failure gives us a strong hint about who’s responsible for this latest disaster. It’s the guy who bragged about getting rid of two regulations for every new one passed—which probably seems like a brilliant and revolutionary idea to your typical booze-besotted MAGA or 13-year-old kid working in an unventilated airplane glue factory, but doesn’t really cut it in the real world. (To be fair, far too many Democrats voted for the regulatory rollback, but it was overwhelmingly a Republican effort.)
Some banking experts on Friday pointed out that a bank as large as Silicon Valley Bank might have managed its interest rate risks better had parts of the Dodd-Frank financial-regulatory package, put in place after the 2008 crisis, not been rolled back under President Trump.
In 2018, Mr. Trump signed a bill that lessened regulatory scrutiny for many regional banks. Silicon Valley Bank’s chief executive, Greg Becker, was a strong supporter of the change, which reduced how frequently banks with assets between $100 billion and $250 billion had to submit to stress tests by the Fed.
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At the end of 2016, Silicon Valley Bank’s asset size was $45 billion. It had jumped to more than $115 billion by the end of 2020.
The radical left-wing Forbes has more:
Because Trump’s EGRRCPA [Economic Growth, Regulatory Relief and Consumer Protection Act] eliminated important elements of Dodd-Frank’s Title I, Silicon Valley Bank and other banks of that asset size, are not required to calculate and report the Liquidity Coverage Ratio, the Net Stable Funding Ratio, or to conduct comprehensive liquidity assessment reviews. Capital and liquidity are not the same thing. High quality capital is comprised of common equity and retained earnings; they help you absorb unexpected losses. Liquidity is having enough assets that you can deploy when you urgently need to meet liabilities under stressed conditions. Clearly when SVB had to meet fleeing deposits which are a significant part of a bank’s liability, it did not have liquid assets to cover them.
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Another important enhanced prudential standard requirement that Trump’s EGRRCPA gutted is the Comprehensive Liquidity Assessment Review (CLAR). The purpose of CLAR is for banks to conduct serious stress tests of their liquidity. Banks focus on how resilient they are both under normal and stressed conditions. While banks do not have to disclose the results to the public, the information is closely analyzed by Federal Reserve analysts to determine a bank’s liquidity.
At some point—hopefully soon—Americans will realize that not only does the economy do better under Democratic presidents, Democrats are better for their health, too. And the usual conservative bleating about “job-killing regulations” is largely a canard.
Until then, we’ll get goofball posturing and Kabuki theater—which is pretty much all Republicans do anymore. When they’re not literally trying to end America, that is.
Check out Aldous J. Pennyfarthing’s four-volume Trump-trashing compendium, including the finale, Goodbye, Asshat: 101 Farewell Letters to Donald Trump, at this link. Or, if you prefer a test drive, you can download the epilogue to Goodbye, Asshat for the low, low price of FREE.