Silicon Valley Bank was one of the midsize banks that no longer was subject to capital requirements and stress tests thanks to the 2018 bill.
The Biden administration on Thursday called on regulators to ensure midsize banks are subject to those rules, something they have the authority to do under the law. The Federal Reserve is currently considering tighter restrictions on midsize banks.
The announcement comes as the administration aims to prevent a repeat of the second- and third-largest bank collapses in U.S. history, which shook the financial system.
Officials said that requirements around how much long-term debt banks must hold should apply to a wide range of institutions, not just the largest banks, a proposal regulators have been working on.
The White House also said that the $23 billion hole in the FDIC’s insurance fund used to protect depositors should not be paid for by fees on community banks, which have less than $10 billion in assets.
The Independent Community Bankers of America cheered that announcement and called on the FDIC to “ensure Main Street community banks do not bear any financial responsibility for losses caused by larger and riskier entities.”
The announcement likely won’t land well with big bank executives, or Republicans leading key finance committees, who have long opposed tighter rules on banks.
The American Bankers Association, which represents banks of all sizes including the largest institutions, called on the Biden administration to slow down.
“With Federal Reserve, FDIC and GAO reviews ongoing, it is premature to call for rule changes by independent regulatory agencies before determining the extent to which supervisors failed to make full use of their existing regulatory tools and authority,” CEO Rob Nichols said in a statement.
