Silicon Valley Bank was a test case for Congress’s 2018 bipartisan banking deregulation law. It failed.
The collapse of Silicon Valley Bank and other similarly sized banks in recent days has put a spotlight on Congress’s 2018 bipartisan banking deregulation law, which was signed by then-President Donald Trump.
We’ll never know what might have happened if the law hadn’t been enacted. But given that Silicon Valley Bank would have been subject to stricter oversight under the old rules, more regulation may have slowed — or even prevented — the panic that set in last week as depositors rushed to withdraw their funds.
Notably, the 2018 law changed which banks are considered “systemically important” to regulators. It increased the threshold from institutions holding at least $50 billion in assets to those with $250 billion. That means only the largest banks face stricter regulation, including requirements to maintain certain levels of liquidity and capacity to absorb losses; comply with company- and government-run stress testing; and submit a living will to prepare for potential failure.