Since the closure of Silicon Valley Bank, Florida Gov. Ron DeSantis has pointed the finger at several culprits, including the company’s diversity initiatives and federal regulators, which he says are “always blowing” to prevent a financial crisis.
But DeSantis’ comments make no mention of his own report on banking regulations. As a member of Congress, DeSantis has openly advocated the deregulation of small and medium-sized financial institutions. in 2018 he voted in favor of a bill that eventually became legislation to loosen oversight of mid-sized banks such as Silicon Valley Bank.
The 2018 law signed into law by then-President Donald Trump is under scrutiny amid the collapse of Silicon Valley Bank, a startup lender whose recent collapse rocked the venture capital world and sent chills through the country’s financial system. , which was passed with bipartisan support, repealed the rules known as the Dodd-Frank Act passed by Congress and signed into law by President Barack Obama after the 2008 financial crisis, including some for small and medium-sized institutions.
Among the many provisions of the 75-page law was a measure supported by regional banks. raised the asset threshold to tighten oversight by federal banking regulators from $50 billion to $250 billion. According to the Federal Deposit Insurance Corporation, this would affect the Silicon Valley bank, which had total assets of $209 billion at the end of 2022.
DeSantis had little to say publicly about the 2018 law, one of his last major votes as a member of the U.S. House of Representatives before he resigned to run for governor, but a year earlier he had repeatedly bragged about the Republican vote to repeal Dodd— Frank. in an interview with Fox Business Network.
During one such speech in June 2017, DeSantis strongly advocated easing restrictions on banks that were lower in the financial food chain.
“You know, the Dodd-Frank article, I think, would be very good for the economy as it would get away from too big to fail and would really take the burden off a lot of our small and medium financial institutions that have just been bludgeoned. Dodd. “Frank,” DeSantis said.
DeSantis’ office declined to comment on his 2018 vote. Speaking in an interview with Fox News on Sunday, DeSantis pointed the finger elsewhere, saying, “We have a huge federal bureaucracy and yet they never seem to be able to be there when we need them to be able to prevent something like this from happening.” .
Sunday’s statements are “self-supporting,” DeSantis spokesman Brian Griffin said Monday.
The 2018 vote is the latest example of DeSantis’ congressional record rife with potential headaches for the Florida Republican as he considers launching a presidential campaign. KFile CNN previously reported that DeSantis called for the privatization of Medicare and Social Security, a stance both Trump and Democrats have seized on that DeSantis has since abandoned. DeSantis also once supported a hawkish approach to arming Ukraine and confronting Russia, but has recently backed Trump in statements criticizing US involvement in a foreign conflict.
DeSantis is not alone among the 2024 contenders supporting a Dodd-Frank rollback. Beyond Trump, who successfully urged Congress to loosen banking regulations, potential candidates Sen. Tim Scott of South Carolina, former Rep. Liz Cheney of Wyoming, and current governor of South Dakota. Christy Noem voted by law 2018
The 2018 law gave the Federal Reserve the flexibility to apply stricter rules to certain banks with at least $100 million in assets, and banks that exceeded that threshold were still subject to “periodic” stress tests under the 2018 law. But the increase in the extended regulation standard to $250 billion was seen as a big win for midsize banks, spurred in part by SVB CEO Greg Becker.
As Becker wrote in a 2015 congressional testimony before a Senate committee, these stricter rules “will stifle our ability to lend to our clients without any meaningful corresponding risk reduction.”
But DeSantis’ past calls for a more liberal approach to the financial industry are also at odds with his more last moves punish banks and cut ties with financial institutions that consider factors such as the environment and the public good in their investment and lending strategies, a business structure known as environmental, social and governance or ESG. DeSantis on Sunday blamed progressive corporate politics for the decline of Silicon Valley Bank.
“They are so concerned about (diversity, fairness and inclusion), politics and other things. I think it really took their focus away from the main mission,” DeSantis told Fox.
The comments echoed a report published over the weekend by another news organization in Rupert Murdoch’s media empire, the New York Post, which published an article describing the diversity of the bank. and efforts to include. Asked what DeSantis meant in his comment, his office declined to elaborate. Former FDIC Chair Sheila Bair, a Republican nominee by President George W. Bush, scoffed at the accusation during an interview with CNN This Morning on Tuesday.
“Let’s not politicize this,” Baer said. “It’s not very helpful.”
DeSantis’ criticism makes no mention of Florida’s financial ties to the SVB. As of June last year, $1.7 billion had been invested in Florida’s pension system. funds under management SVB Capital, the investment arm of the financial group Silicon Valley Bank. That figure has doubled since DeSantis became governor. DeSantis is one of three trustees of the State Administrative Council, the body that oversees the state’s pension funds.
While the state has a significant stake in the SVB-related business, its direct impact on the bank was less than $25 million of the $177 billion in government pension investment, according to a state council spokesman.
DeSantis’ quest to unravel Dodd-Frank began during his successful first run for Florida’s congressional seat. in 2012when he ran as a Tea Party Conservative whose platform called for a repetition of the Dodd-Frank and Sarbanes-Oxley Act, a bill that passed by an overwhelming majority in 2002, when the House and Senate lost only three votes after the Enron and WorldCom accounting scandals.
After the victory, DeSantis helped found the conservative Freedom House caucus and worked with other conservatives to make repealing Dodd-Frank a priority. Early on, DeSantis focused on repealing the rules for public banks, and repeatedly voted for legislation to repeal much of the law.
But by 2017, when Trump was re-elected, Republicans in the House of Representatives responded to the president’s broader calls to repeal parts of Dodd-Frank. Passing Financial Choice Law. In addition to relaxing many banking rules, it would also abolish the Orderly Liquidation Authority, which allows the federal government to intervene if the bank is on the verge of collapse. DeSantis voted in favor of the bill.
Four days after its passage, DeSantis appeared on Fox Business’s “Morning with Mary” arguing that the bill would free up lending for small businesses. DeSantis argued, “Dodd-Frank is really hurting small and medium-sized institutions.”
He lamented that it was unlikely that the Senate would pass the House bill. Instead, the Republican-controlled Senate passed its own bill in 2018 with the support of 17 Democrats and sent it to the House of Representatives. The Senate bill did not repeal the Orderly Liquidation Act, but included fewer provisions for midsize banks.
DeSantis voted for him and Trump signed him.