Sen. Joe Manchin (D-West Virginia) suddenly isn’t so sure whether it’s such a great idea to repeal bank regulations.
On Tuesday, Manchin reportedly said that in the wake of the failure of Silicon Valley Bank, he wouldn’t vote again on the sweeping bill that got rid of Dodd-Frank regulations implemented after the Great Recession to prevent major bank failures and corruption — marking a reversal from the stance he took just years ago.
In 2018, Manchin was one of 17 conservative Democrats in the Senate who voted “yes” on the deregulatory actions now blamed for the second-largest bank collapse in U.S. history. When asked by CNN’s Manu Raju this week if he’d do the same today, however, Manchin said: “Oh, no, you look at it differently now. You’d never thought this would have happened in the smaller banks.”
Notably, Silicon Valley Bank isn’t strictly a small bank. Though widespread bank consolidation over the past decades has allowed just five huge banks to control nearly half of the banking industry, Silicon Valley Bank was, at the time of its collapse, the 16th largest bank in the U.S., out of thousands. It had $209 billion in assets at the end of last year.
Thus, it is significant that Manchin would say that the 2018 bill was supposed to only deregulate “small” banks; by that, he means basically every bank except for the largest 11 banks, as the bill “only” affected banks that control less than $250 billion. And, even though Silicon Valley Bank was “small” by Manchin’s standards, its collapse is sending shockwaves across industries and world economies and will place a strain on the federal government as it rushes to contain the fallout.
Still, Manchin managed to rail against regulation of banks even as he said that deregulation isn’t a good idea.
“I’m open to making adjustments that still allow the small community and rural areas to still function without overregulating to the standpoint where they can’t participate or they go out of business. You make an overregulation to the point where they just can’t function,” he said, ignoring the fact that it was not overregulation, but deregulation that experts say was a major contributor to the bank that’s now having to be shut down.
Despite saying that he wouldn’t support deregulation now, he still doubled down on his “yes” vote from 2018.
This is plainly contradictory. If Manchin hadn’t voted for the bill in 2018, and it failed to pass, then the Silicon Valley Bank collapse may not have happened, some experts suggest, as the bank would have been subject to more regulatory oversight. It’s only in hindsight, it appears, that Manchin realized that that vote may have caused a fiasco like this one — though perhaps his vote at the time was heavily influenced by institutions like Silicon Valley Bank, who lobbied against the regulation.
But even feigned ignorance isn’t much of a cover for the coal baron. Back before the bill was passed, the Congressional Budget Office (CBO) warned members of Congress of the risk that, indeed, a mid-sized bank “with assets of between $100 billion and $250 billion would fail” under the legislation. On the Senate floor, lawmakers like Sen. Bernie Sanders (I-Vermont) reprimanded their coworkers for learning nothing from the 2008 recession. With knowledge of the risk, however, members of Congress passed it anyway.
Now, Sanders and other Democrats and progressives are calling for the 2018 legislation to be overturned and for Dodd-Frank protections to be reinstated — and for it to be done immediately to avoid further disasters.
“Congress, the White House and banking regulators should reverse the dangerous bank deregulation of the Trump era. Repealing the 2018 legislation that weakened the rules for banks like S.V.B. must be an immediate priority for Congress,” wrote Sen. Elizabeth Warren (D-Massachusetts) in an op-ed for The New York Times on Monday.
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