Thing to Know Thursday: New Regulations Coming After Silicon Valley Bank Failure

Written by obenlegal

March 16, 2023

The Run-Down: Lawmakers disagree on new regulations after SVB mayhem

  1. Last week, the Federal Deposit Insurance Corp stepped in to shut down SVB after its collapse
  2. Through a newly created entity, the Deposit Insurance National Bank of Santa Clara, the $209 billion in assets have been transferred and insured investors will be able to access 
  3. Both republicans and democrats agreed with regulators’ decision to step in – but that’s about all they agreed on

Why You Should Care:

After mismatching its investments to the deposits funding them, the billion-dollar-backed bank collapsed within 48 hours propelling a tech-bro hysteria, unlike anything we’ve ever seen. The collapse left many wondering about the future of SVB and others alike – while regulators were left scrambling to pick up pieces at the scene of the crime. 

From the two parties on opposite ends of the decision-making spectrum to disagreements within each party themselves, we’re reaching a point where action needs to be taken and how we do that is still unknown.

In typical fashion, democrats want to tighten regulations on midsize banks, while Republicans believe Democratic spending is what created this problem in the first place. They believe inflation caused by Biden’s budget is the issue, and thus, new rules just aren’t necessary. 

Wherever you land on this… one thing is clear: change is coming and (hopefully) coming fast.

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