Senate Banking Committee’s Bill Raises Questions About Accountability for Silicon Valley Bank’s Collapse

Last week, the collapse of Silicon Valley Bank sent shockwaves through the financial world, sparking a bank run and raising questions about accountability for the bank’s failure. Senate Republicans, however, insist that the bank deregulation bill signed into law five years ago had nothing to do with the bank’s collapse.

The Wall Street Journal reported in November 2022 that the Federal Reserve’s interest-rate hikes were inflicting losses at SVB, which ended up sparking the bank run. Republicans blame the regulators for failing to spot problems on balance sheets at Silicon Valley Bank and Signature Bank in New York.

In 2018, members of the Senate Banking Committee wrote a bill that could shape the federal response to the crisis. TPM spoke with several experts to suss out a list of questions that frame up the crisis, including “Where were the regulators?”

Experts have also suggested that the whole debacle could have been avoided if the regulators had stepped in and said, “Silicon Valley Bank, what you’re doing is dumb, and you can’t do it anymore.”

The exact cause of the bank’s collapse remains unclear, and the federal response is yet to be determined. It is likely that the Senate Banking Committee’s bill will play a role in the outcome of the crisis. In the meantime, the financial world is left to speculate on the cause of the bank’s collapse and the potential consequences.