The US government charged the ex-president on Thursday Donald Trump be responsible for Silicon Valley and Signature Banks Fall since during his tenure he eliminated some of the organizational oversight requirements.
“Unfortunately, the Trump administration and its regulators weakened many sets of normsSignificant claims and oversight of major regional banks such as Silicon Valley Bank (SVB) and Signature Bank, whose recent bankruptcy led to risk of infection throughout the banking system,” a White House source told the media.
According to “independent experts,” he added, “these failures under the previous administration contributed to recent bank failures“.
Photo: Reuters
For this reason, he said, US President Joe Biden has asked federal banking agencies to consider set of reforms reduce the risk of future banking crises.
He clarified that these reforms can be made “in accordance with existing legislation” and “there is no need for congressional action authorizing agencies to take any of these steps.”
“It’s about making sure we stability and stability protection banking system in the future,” he added.
In the opinion of this official source, in recent weeks, “things have begun to improve.” significantly stabilizedand “people need to be sure that their contributions will be there when they need them.”
But “we also think it’s important that regulators take action to prevent future banking crises,” he added.
The White House statement clarified that after the banking crisis of 2008, the Obama-Biden administration imposed tough requirements, mainly through Dodd-Frank Actto reduce the risk of future banking crises.
However, the Trump administration’s regulators have “relaxed many important requirements.” Among them is a rule that forced banks with assets of less than 250,000,000,000,000 to maintain a sufficient number of high-quality liquid assets to cover the expected net churn during the stress period.
At the end of 2022, Silicon Valley Bank “was significantly below liquidity threshold”, which would have applied if the Trump administration had not exempted the bank from these rules.
In addition, under Trump, the requirement for banks of this size to undergo stress tests once or twice a year has been removed.
“When the Silicon Valley bank collapsed, it was never subjected to a comprehensive capital stress test, even though its assets exceeded $200 billion,” the White House said.
Trump administration regulators also removed the requirement for $100 billion to $250 billion bank holding companies to submit comprehensive resolution plans, believing that the collapse of these banks would not threaten the financial system.
However, the failures of SVB and Signature Bank “have now clearly demonstrated that failures of banks of this size can represent systemic risk“.
Hours after the downfall of these organizations became known, on March 12, US regulators launched a plan to protect the SVB fields.
Treasury Department, Federal Reserve System (fed) and the Federal Deposit Insurance Corporation (FDIC) have announced that customers will have access to all money deposited with these institutions.
The Fed also launched liquidity line for banks experiencing funding difficulties, to prevent mistrust from spreading to other institutions and so that what happened does not lead to a deeper financial crisis.
Photo: Reuters
At an event for the National Association for Business Economics, Treasury Secretary Janet Yellen also said today that the banking deregulation what has been done in your country in recent years.
“Regulatory requirements have been relaxed in recent years. I think it is appropriate to evaluate the impact of these deregulation decisions and take the necessary measures,” he said.
Thus, he added, “it is important that we reconsider the question of whether current supervisory and regulatory regimes they are adequate to the risks that banks face today, and we must take action to address these risks, if necessary.”
(EFE)
Source: Aristegui Noticias
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
