WASHINGTON, DC, March 16, 2023 – A new analysis from government watchdog Accountable.US found that after Silicon Valley Bank (SVB) and the larger financial industry successfully lobbied Republicans in Congress to gut risk-assessment rules for banks under Dodd-Frank in 2018, SVB’s top three named executives saw their total compensations increase by double-digit percentages in the years that followed with its CEO seeing a 30% increase by 2022.
In addition, just months after President Trump signed into law S. 2155 – the bill many experts credit with SVB’s collapse by removing key safeguards — SVB’s holding company, SVB Financial Group, announced a new $500 million stock buyback program that rewarded wealthy investors. Accountable.US also found SVB charged consumers over $462.7 million in service charges and junk fees in the last five years under laxer oversight.
“SVB’s c-suite wasted no time enriching themselves and wealthy investors after the Trump-era rollback of banking safeguards in 2018, including a new $500 million buyback program just months later, while executives gave themselves generous pay bumps,” said Liz Zelnick, Director of Economic Security and Corporate Power. “Congressional Republicans took a hatchet to reforms that likely could have prevented this crisis and predictably, SVB executives exploited the sudden lack of oversight by engaging in riskier behavior and investments to make a quick buck. SVB going on to sock consumers with nearly a billion dollars in junk fees in the years that followed is consistent with a company completely overcome with greed.”
Accountable.US’ review also found that after the passage of S. 2155, several current Republicans on the Senate Banking and House Financial Services Committees praised the Dodd-Frank roll back now haunting them and threatening the stability of the financial system.
There was no bigger cheerleader at the time than Rep. Patrick McHenry, now the powerful House Financial Services Chairman – who proclaimed S. 2155 was a “win for consumers” and an “important first step to undo Dodd Frank,” adding that he was “proud to have played an active role in drafting this bill.” Accountable.US found Silicon Valley Bank and its parent company gave $10,000 to McHenry alone.
In the days leading up to the collapses of SVB and Signature Bank, Acountable.US found some Republican lawmakers continued railing against capital requirements and the Dodd-Frank regulatory framework enforced on banks.
During a March 2023 congressional hearing, several Republicans, including Chairman Patrick McHenry (R-NC), Rep. Frank Lucas (R-OK), and Rep. Roger Williams (R-TX), used talking points that increased Fed oversight would “increase borrowing costs,” citing concerns that the Fed was unfairly looking at capital requirement tests.
More alarmingly, following SVB’s collapse, Congressional Republicans doubled-down on their views that S. 2155’s deregulations were still appropriate, including Chairman McHenry who blamed Twitter for “fuel[ing]” Silicon Valley’s bank run. Sen. Kevin Cramer (R-ND) defended S. 2155, saying “’I don’t think smaller banks need more oversight and regulation.”
“Less oversight and accountability of banks historically leads to riskier, Casino-like behavior with other peoples’ money – but that didn’t stop Republicans in Congress from gutting critical safeguards after taking millions of dollars from the financial industry,” added Zelnick. “SVB’s collapse was predictable and should give serious pause to the current Republican majority who recklessly propose even further roll backs of industry oversight and consumer financial protections. For a change, they should put consumers and the economy first instead of their industry mega-donors.”
Accountable.US is a nonpartisan watchdog group that exposes corruption across all levels of government.