RICHMOND, Va. (WRIC) — Virginia Senator Mark Warner, who has accepted over $30,000 in campaign contributions from the failed Silicon Valley Bank, said he does not regret his 2018 vote to roll back banking regulations.
Silicon Valley Bank (SVB) primarily served the cash-flush startups of California’s Bay Area, but became the second-largest bank failure in U.S. history when a panic set off by venture capitalists resulted in a bank run.
Now, as depositors get a bailout from the government — with shareholders left out to dry — attention is turning to the underlying causes of the catastrophic failure, with many pointing to the deregulation of many banks under the Trump administration.
The key event in that push was the repeal of parts of the Dodd-Frank banking act, which was originally enacted in the wake of the 2008 financial crisis in an effort to reign in big banks. Warner helped write the original Dodd-frank regulations in 2010.
The 2018 rollback of some banking regulations was passed with overwhelming Republican support — and the votes of 17 senate Democrats, including Virginia Senator Mark Warner.
In a statement to 8News, Warner’s office said he does not regret that vote.
“Years after he helped write and pass that bill, it became clear that smaller banks were struggling under the weight of rules and regulations designed to keep the big banks on Wall Street from wrecking our economy,” they wrote.
SVB was a major donor on the national stage, making significant contributions to party leaders and representatives on both sides of the aisle.
Now, high-profile Democrats who received campaign funds from the bank are rushing to distance themselves, with Senate Majority Leader Chuck Schumer (D – New York) promising to donate the funds to charity.
Meanwhile, Representative Maxine Waters (D – Los Angeles), the lead Democrat on the house committee overseeing banks, has vowed to “send it back” to SVB in the wake of the bank’s collapse.
But the single largest recipient of funds from SVB in the Senate is Virginia Democrat Mark Warner, who since 2014 has taken $21,600 from SVB-linked PACs and additional $12,400 from individuals working at the bank.
Warner has repeatedly declined to say whether he will return the over $30,000 he took from SVB and individuals working for the bank, but said that “he never has and never will be influenced by campaign contributions.”
Too Small to Fail?
Among the changes endorsed by Warner and the other supporters of the rollback was an increase in the threshold for becoming a ‘big bank’ — and therefore facing strict regulatory scrutiny — from $50 billion in assets to $250 billion.
At time of collapse, Silicon Valley Bank had $209 billion in assets, making it the 16th largest bank in America — but not big enough to be covered under the revised Dodd-Frank act.
But Warner said the repeal put an “appropriate level of regulation” on Banks like SVB and Signature Bank, a $110 billion crypto-focused bank that also collapsed in the past week.
Instead, he pointed the finger at potential failures by regulators, writing, “There are also major questions about whether regulators at the San Francisco Fed should have caught that problem, because under the terms of Dodd-Frank and S. 2155, they absolutely had the tools and the authority to do that.”
Criticism of regulators has focused on the role of federal officials in California, who largely stood by last year even as red flags appeared in public filings. The primary risk to SVB came from recent interest rate hikes at the Federal Reserve, because the bank had taken out extremely large bonds when interest rates were low, which lost value when rates rose this year.
Those were risks that Warner and others have argued should have invited regulatory intervention long before the bank collapsed.
But critics have said that while regulatory lapses may have played a role in concealing the bank’s mismanagement, the rollback of Dodd Frank exempted SVB from running and publicly disclosing so-called “stress tests” — theoretical scenarios outlining how the bank would fare under sudden financial shocks. Those tests, they argue, would have immediately shown just how risky SVB’s strategy was.
Warner has also been one of the most vocal proponents of federal intervention on SVB’s behalf. While Warner has ruled out the possibility of a 2008-style bailout, saying shareholders “took a risk investing in SVB and lost,” the senator has called for the federal authorities who took over the bank last week to find a buyer for the bank to stabilize the financial sector — a search that has so far been fruitless.