The U.S. Chamber of Commerce sent a letter to the Federal Reserve, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency Thursday expressing gratitude at regulators' rescue of business accounts but also blaming regulators for failing to identify risk in the failed banks.
"The Chamber appreciates that financial regulators acted quickly to ensure that small businesses retained access to deposits so they could make payroll," the letter reads.
The Chamber said it was troubled by what it characterized as many government officials' — including President Biden's — swift calls for new rules to prevent future failures. The letter warned against "reverting to Dodd-Frank Act standards" and praised the 2018 law that eased regulatory standards for midsize banks like SVB and Signature. It wasn't clear, the Chamber said, that any new regulation is needed, especially when weighed against the potential dampening effects rules could have on business activity.
"We are therefore confused, if not troubled, by calls for regulation that would purportedly improve stability in the banking system when policymakers have not completed their evidence-based review or recommended what new regulations, if any, could have prevented the failure of these banks," the letter said.
They also asked that regulators not allow the failures — which were the second- and third-largest failures in history — to sway implementation of forthcoming rules.
"The final Basel III standards were developed many years ago, we should not necessarily let the failure of SVB and Signature sway how they are implemented," the letter said.
The Chamber defended the 2018 law S. 2155 — the first substantial legislative adjustments to Dodd-Frank — and said despite exempting midsize regionals from higher capital standards, it had no culpability in the failures. Under the original Dodd-Frank, all bank holding companies exceeding $50 billion in assets were subject to enhanced prudential regulatory requirements. The 2018 law exempted banks with assets up to $250 billion from such stricter standards, and provided the Fed discretion to apply tailored regulation to banks with $100 billion in assets or more.
The letter said one benefit of S. 2155 was that less regulation allowed midsize regional banks to compete with larger banks. At the same time, they said because the law allowed regulators the ability to tailor regulations on banks of that size, that regulators should look to enhance supervision, not stronger regulation, to help prevent future failures.
"Failures in supervision cannot be explained by the policy goals prescribed by Congress," they wrote, "In our view, stringent regulations imposed on the entire banking system are not a replacement for weak management or lax supervision at individual banks."
