Biden tightens the screws on the American banking system. The President of the United States has asked regulators to restore most regulatory constraints for US regional banks. These regulations were removed in 2018 by Congress under the leadership of Donald Trump. The stated objective of the White House is to limit the risks of new banking crises.
The Head of State notably suggested focusing on mid-sized institutions – those with assets of between 100 and 250 billion dollars – such as Silicon Valley Bank (SVB) and Signature Bank, which all have two went bankrupt in early March.
Dozens of elected Democrats have asked for several weeks for the reinstatement of the provisions canceled in 2018 and tabled a bill to this effect. However, the measures demanded by President Biden on Thursday “could be taken without legislative amendment, without congressional intervention,” said a White House official.
Deregulation has “gone too far”
The regulation of banks in the United States is divided between three distinct entities, the American central bank (Fed), the Deposit guarantee agency (FDIC) and the OCC (Office of the Comptroller of the Currency), the authority which oversees some 1,200 banks present in several American states.
The White House did not mention the Fed, which is an institution nominally independent of the executive branch and does not receive direction from the government. It is she who carries out the “stress tests” on the banks.
Earlier on Thursday, the US Treasury Secretary claimed that banking deregulation may have “gone too far”, in a thinly veiled attack on former President Donald Trump. Janet Yellen also considered it urgent to “finalize the reforms” post-financial crisis of 2008-2009.
