What to Know in Washington: Leaders Slow-Walk Banking Changes
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Speaker Kevin McCarthy (R-Calif.) and Senate Majority Leader Chuck Schumer (D-N.Y.) don’t agree on much, but neither party leader in the US Congress is in a rush to push legislation addressing the failures of Silicon Valley Bank and Signature Bank.
Political divisions among Democrats and Republicans’ hardening stance against a legislative response diminish the chances that Congress will heed mid-size banks’ calls to increase the Federal Deposit Insurance Corp. cap or toughen supervision. In the coming weeks, the House and Senate will instead focus on hearings exploring the root causes of the collapses.
McCarthy and other Republicans blame regulators — rather than a lack of regulations — for the failures and the troubles at First Republic Bank. They also point the finger at the rippling effects of inflation, which they say occurred on the Democrats’ watch, as well as spiked interest rates, weakening the banks’ long-term securities holdings.
A number of moderate Senate Democrats voted for an 2018 easing of regulations and so far aren’t saying they were wrong to do so.
Progressive Democrats want to impose stress tests and tighter liquidity and capitalization standards on mid-size banks. But Schumer, once known as “the senator from Wall Street” and the No. 2 Senate recipient of funds from commercial bank employees and their political action committees, wants to find a bipartisan solution — not an easy task in the current political climate.
Erik Wasson, Laura Litvan, and McKenzie Wilson walk through the possible options before Congress.
MORE ON THE FINANCIAL FALLOUT
- Treasury, Fed and FDIC officials will brief lawmakers on the Senate Banking Committee today by Zoom, Sen. Kevin Cramer (R-N.D.) told Bloomberg. Read more
- The Senate Banking Committee will hold the first of several hearings on the collapse of Silicon Valley Bank and Signature Bank on March 28, committee Chair Sherrod Brown (D-Ohio) said in statement. Read more
- Wall Street leaders and US officials discussing an intervention at First Republic Bank are exploring the possibility of government backing to encourage a deal that would shore up the lender, people with knowledge of the situation said. Read more
- Sen. Elizabeth Warren (D-Mass.) said Tuesday she doesn’t think multibillion-dollar banks should get an increase in federal insurance without tighter regulation. Read more
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Sen. John Cornyn (R-Texas), one of McConnell’s closest friends in the Senate, said he sounds “sharp” but there is no timetable as far as when he would come back. “He’s chomping at the bit,” Cornyn added.
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Elections, Politics & Probes
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Around the Administration
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- White House Press Secretary Karine Jean-Pierre gives a briefing at 3 p.m.
Biden Teases 2024 Run While Honoring Celebrities at White House
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US Condemns Israel Over Reversal on West Bank Settlements Law
The Biden administration condemned an Israeli parliament vote repealing a 2005 law that barred settlers from parts of the West Bank, calling the move “provocative and counterproductive.”
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