To prevent SVB-like failures, Biden calls for revival of banking regulations weakened under Trump

US president Joe Biden on Thursday urged banking regulators to reinstate tough rules on mid-sized banks in the United States. The rules, as per AFP, were weakened under his predecessor Donald Trump. Biden said that the revival of the regulations would help prevent future failures like the one Silicon Valley Bank underwent in recent days.

As per a White House fact sheet, Biden urged regulators to consider a set of reforms to "reduce the risk of future banking crises."

The fact sheet, as per AFP, was addressed to "federal banking agencies, in consultation with the Treasury Department" and did not explicitly name the US Federal Reserve or the Federal Deposit Insurance Corporation(FDIC).

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Biden sought for the banks to undergo annual stress tests, as well as "living wills" outlining how assets would be liquidated in the event of failure and stringent capital requirements.

Following the 2008 financial crisis, in the US, a law called the Dodd-Frank law was passed. The law imposed stricter standards on banks with at least $50 billion in assets.

Under Donald Trump's administration, the rules for mid-sized banks with $100 and $250 billion in assets were eased. However, the largest US banks, such as Citigroup and JPMorgan Chase, continue to be subjected to the strictest capital and liquidity requirements.

In 2018, Trump signed into law a reform that removed tougher standards for banks with assets between $50 to $100 billion. While for banks with assets of $100-$250 billion, tougher rules were not adopted automatically, rather they were imposed on a case-by-case basis.

(With inputs from agencies)

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