The Destructive Deregulation Merry-Go-Around (Again) – The Daily Montanan
The recent bank crisis that saw the collapse of Silicon Valley and Signature Banks is now being blamed on the deregulation bill passed by Congress and signed into law by President Trump in 2018. To set the record straight, the measure was supported by several Democrats. As well as Republicans, including Montana’s Sens. Democrat Jon Tester and Republican Steve Dines.
Both claim they voted in favor of a bill that repealed the Dodd-Frank banking regulation law to protect Montana’s small banks. But the “small bank cut-off” for strict federal oversight is actually $250 billion in assets.
The Silicon Valley bank had more than $200 billion in assets, but when it became known that the bank was in trouble, large depositors such as billionaire Peter Thiel, who started PayPal, moved their significant holdings out of the bank and ” Run” started. Which collapsed the bank in just 24 hours.
One might wonder why Tester and Daines thought that removing federal oversight would help Montanans. After all, anyone with money in a bank naturally wants confidence that their deposits are completely safe from accident.
Both Daines and Tester have taken significant campaign donations from the banking industry. And Tester sits on the Senate Banking Committee, where he is constantly wooed by banking lobbyists. Not that any of this is unusual, as evidenced by Senate Majority Leaders Chuck Schumer, (D-NY) and Maxine Waters (D-CA), who have been asked to return donations received from Silicon Valley bank operatives. Rushed for, he said that he would be “donated to charity.”
It’s hard to see how bringing back regulatory oversight benefits Montana’s “small banks” – or the Montanans who put their money and trust in those institutions. Likewise, it is very difficult to see how Tester’s and Daines’ votes did anything to stabilize the country’s financial situation. As mentioned, it seems to have achieved exactly the opposite with “heaviest”. [stock] The losses were concentrated at small and medium-sized banks, which are seen as at risk by customers trying to withdraw their money en masse.
Legislation has now been introduced to restore former Dodd-Frank regulatory oversight and revive “stress tests and thresholds set for capital rules that are designed to protect small and medium-sized businesses in light of the recent collapse of Silicon Valley Bank and other institutions.” Relaxation was given for banks of size.
If it seems like Congress is on a regulation-free merry-go-round, that’s because that’s exactly what’s happening…especially when greed overcomes good management and bankers can’t stop themselves from grabbing a ring of gold. Can’t find
Of course this is no news to Montanans, who live through their own deregulation merry-go-round. First our legislature deregulated utilities in the 90’s, resulting in Montanans going from the lowest electricity costs in the region to the highest. So then they regulated the utilities again and now we have Northwestern Energy’s monopoly and ever-increasing rates.
Someday we may learn, but our current legislature is again walking a tightrope, this time over local zoning and environmental regulations. And so the merry-go-round continues, until it comes crashing down… which is the almost inevitable result of letting greed run wild when discretion gets the boot.
George Ochensky is a longtime Helena resident, an environmental activist and Montana’s longest running columnist.