Biden Vows to Hold Banks Accountable, Urges Stronger Rules (2)
President Joe Biden sought to reassure jittery consumers and markets the US financial system is on solid footing, promising to hold responsible those behind the collapse of two banks and saying he would urge Congress to strengthen regulation of the banking system.
“Americans can have confidence that the banking system is safe. Your deposits will be there when you need them,” Biden said Monday at the White House after the collapse of Silicon Valley Bank and Signature Bank raised fears of a full-blown banking crisis.
The president said all customers who had deposits at both banks can “rest assured they’ll be protected and they’ll have access to their money as of today.”
Regional banks led declines among the 24 stocks on the KBW Bank Index, which plunged the most since March 2020. The gauge is heading for a sixth straight decline, the longest since October. Western Alliance Bancorp plummeted 61% before a trading halt, and First Republic Bank dived 66%.
Biden said he would ask Congress and banking regulators “to strengthen the rules for banks to make it less likely this kind of bank failure would happen again, and to protect American jobs and small businesses.”
But he didn’t specify any policy proposals, and any attempt to further regulate banks would likely encounter resistance in the Republican-controlled House. Biden, whose economic team recently underwent a significant turnover, is already facing a showdown with GOP lawmakers over raising the federal debt ceiling as he prepares to launch a planned 2024 reelection bid.
“Changing the rules after the crash to prop-up liberal investors at the expense of taxpayers is pure crony capitalism,” said David McIntosh, president of the Club for Growth, a conservative group focused on economic policy. “The additional regulations being proposed by Biden would only make the situation worse and further consolidate power among the big banks and hurt regional banks that small businesses rely on.”
John Berlau, director of finance policy at the Competitive Enterprise Institute, said “prudent banks suffering the fallout from SVB should not be punished by a flood of counterproductive red tape.”
The last major financial overhaul, the Dodd–Frank Wall Street Reform and Consumer Protection Act, took more than a year to get enacted, even with Democrats in control of both chambers of Congress and the White House.
Read the full article on Bloomberg.