Biden goes big on banking regulations as Republicans push back

Haisten Willis

March 18, 07:00 AM March 18, 07:33 AM

President Joe Biden is hoping to turn the Silicon Valley Bank collapse into a legislative victory, but he'll face plenty of Republican resistance along the way.

The president spent last week calling to reinstate banking regulations that were rolled back five years ago while seeking new punishments for banking executives whose operations fail.

SVB COLLAPSE: BANK CRISIS BECOMES ANOTHER BIDEN VS. TRUMP WAR AHEAD OF 2024

"I'm firmly committed to accountability for those responsible for this mess," Biden said Friday. "No one is above the law — and strengthening accountability is an important deterrent to prevent mismanagement in the future."

Echoing Biden, Democrats are sounding the alarm on Capitol Hill.

Sen. Elizabeth Warren (D-MA) and Rep. Katie Porter (D-CA) have introduced legislation to reverse the partial Dodd-Frank Act rollback that Congress approved in 2018, while Sen. Bernie Sanders (I-VT) laid the blame at the feet of Donald Trump.

“Let’s be clear. The failure of Silicon Valley Bank is a direct result of an absurd 2018 bank deregulation bill signed by Donald Trump that I strongly opposed,” Sanders said. Biden himself has also blamed the former president.

But Republicans say there's more to the story than the simple cause and effect of regulations relaxed, banks fail.

For one, 17 Senate Democrats voted to approve the rollback on midsized banks, as did 33 Democrats in the House. But Republicans also point to existing regulations that should have placed a red flag over SVB, arguing that better enforcement is the answer.

“This bank was supervised by the Federal Reserve and the state of California — SVB’s failure is the result of mismanagement and failed supervision," said a spokesperson for Sen. Tim Scott (R-SC). "Regulators said SVB was 'idiosyncratic.' If that’s the case, how did they miss the idiosyncrasies and the risk? If this is such an outlier in the system, why wasn’t action taken? Regulators failed to do their job with regards to SVB, and if regulators can’t do their job with what the law gives them now, why is giving them more regulations the better route?”

Going on the attack, Republicans point at high inflation, which the Federal Reserve has been combating with aggressive interest rate hikes that played a role in SVB's collapse. Republicans blame Biden, and specifically the $1.9 trillion American Rescue Plan Act he signed soon after taking office, for pushing inflation from 1.4% the month he took office to a peak of 9.1% last summer, spurring the rate hikes.

Some conservatives argue that banks will work their way around any new regulations and question the need for government interference in the sector.

“When any other business is reckless or irresponsible, we allow them to go bankrupt,” said EJ Antoni, a research fellow at the Heritage Foundation. “I’m not sure why we treat banks differently. And I’d say the fact that we do is partly why we keep having problems in the banking industry. These people know that when things go South, they will get bailed out.”

Biden is attempting to address that issue by calling for punishments on executives when banks fail. His Friday statement called for empowering regulators to reclaim compensation from executives, impose civil penalties, and even ban executives from the industry.

Any accompanying fact sheet cited the SVB CEO reportedly selling more than $3 million worth of shares before the collapse as activity that should be regulated.

And while the president is calling on Congress, he could try to make a go of things on his own as well. The Biden administration has been aggressive about taking action on its own, from student loans to child care to gas stoves to gig workers.

With skeptical Republicans leading the House of Representatives and conservatives dominating the Supreme Court, Biden may have trouble getting his initiatives through.

But the president is likely winning the all-important battle to reach voters, argues Democratic strategist Brad Bannon.

“It’s a great message from the Biden administration about cause and effect — you deregulate banks, they start blowing up,” Bannon said. “The reality is, besides Republicans, most Americans favor the strict regulation of banking institutions.”

While inflation played a major role in the Fed jacking up interest rates, which played a major role in the SVB collapse, Bannon says most voters are going to connect more directly with the regulation argument.

“It speaks to populism. It speaks to big businesses failing the public,” said Bannon. “The Republicans failed the public by deregulating banks. This is a battle that Joe Biden definitely wants to fight with House Republicans.”

House GOP promises energy policy change if party wins majority in midterm elections

Jeremy Beaman

October 28, 03:15 AM October 28, 03:15 AM

House Republicans, equipped with the political battering ram of high fuel prices, are hoping to win voters over on Nov. 8 by promising to command an energy policy turnabout in Washington if voters award the party control of the chamber.

The Democrats scored a major legislative victory in August with the enactment of the Inflation Reduction Act, including provisions to make alternative energy sources cheaper and more abundant and to help displace demand for fossil fuels. At the same time, President Joe Biden's tenure to date has been marked by historically high prices for oil, natural gas, and retail gasoline (energy sources that, according to estimates, are not going to be out of demand any time soon) and mutual acrimony between his administration and the oil and gas sector.

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Republicans have sought to present a clear contrast with Biden's green policies that have disfavored new oil and gas infrastructure and the expansion of leasing on federal lands in favor of renewable energy sources. A big component of the strategy House Republicans are pitching to voters is promising to support more domestic production of oil and gas, which they maintain can serve global greenhouse gas emissions reduction goals and the security of U.S. energy supplies.

House Minority Leader Kevin McCarthy has overseen the establishment of multiple caucuswide "taskforces" over the last year. That includes an Energy, Climate, and Conservation Taskforce to shape the conference's agenda and set it up for victory in the midterm elections.

The energy task force has promoted legislation to invest in clean energy infrastructure and land conservation. Republican lawmakers also have argued that the nation's economic and energy security needs require Washington to balance the continued need for fossil fuels alongside measures to mitigate climate change.

Rep. Buddy Carter (R-GA), a member of the Conservative Climate Caucus, said the United States needs an "all-of-the-above" energy strategy. That's a common refrain Republicans use to mean a strategy that values all kinds of resources, from wind to nuclear and natural gas.

"I'm all for renewables, but I believe in an all-of-the-above-type energy strategy, and I don't believe that we can destroy our economy, trying to achieve [more] renewables," Carter told the Washington Examiner in an interview.

Carter brought up a summer trip to Europe, where countries have, in recent years, moved more aggressively into renewable energy and restricted new fossil fuel development. Those countries now face a grave energy supply crisis due to a steep drop in Russian gas imports.

Now, a number of countries are resurrecting coal-fired power plants to deal with the crisis in the short term.

"I went to Europe earlier this year and witnessed what has happened over there, where they have let their policies get ahead of their technology," Carter said. "They're in a mess, and we can learn important lessons from that right here in the United States. If we don't, shame on us."

The Biden administration, in response to the war in Ukraine and the associated disruption to global energy markets, has somewhat tempered its approach to oil and gas production compared to the president's early days in office. It has promised to help facilitate more U.S. liquefied natural gas shipments to allies in Europe and approved additional exports while also urging domestic producers to increase oil production to bring down fuel prices.

Environmental groups have been sharply critical of the administration for not being more aggressive in restricting new oil and gas development. Some have accused them of capitulating to the oil industry by carrying out new oil and gas leasing and encouraging more production.

"You can increase oil and gas production now while still moving full-speed ahead to accelerate our transition to clean energy," Biden said in rebuke to that line of thinking.

Biden and the Democrats have also persistently leveled price-gouging charges at big-name oil producers and refiners, as well as retailers, accusing them of unduly raising prices. For producers, in particular, the White House has criticized them for not increasing output more quickly in response to high prices.

Oil and gas sector players, meanwhile, have insisted their conservative spending approach to additional production is driven, in large part, due to market "signals" sent by policymakers in Washington, who want to oversee a phaseout of oil and gas sooner rather than later.

House Republicans intend to counteract that.

"We do play a role. And even acknowledging that we will have an adversarial White House, the market signals from Congress, and showing that real regulatory reform is our priority, matters," a senior House Republican policy adviser told the Washington Examiner.

On regulatory reform, the conference wants to pursue changes to some environmental laws like the Endangered Species Act "out of the gate," the person said.

The ESA, like the National Environmental Policy Act, was signed into law by President Richard Nixon in the 1970s, ringing in a new era of environmental stewardship to govern federal decision-making for approving pipelines, electricity transmission, and mineral leasing on federal lands, among other things.

Environmental groups have frequently and successfully invoked both laws in court to inhibit, and in some cases reverse, federal decisions authorizing projects and drilling permits.

An infrastructure permitting reform proposal drawn up by Sen. Joe Manchin (D-WV) and endorsed by Biden, Senate Majority Leader Chuck Schumer, and House Speaker Nancy Pelosi included language to limit the ability of interest groups to use environmental laws to stop projects, although it lacked the votes needed to pass. A large number of House and Senate Democrats said the bill would undermine environmental stewardship, while some Republicans who spoke out against the bill thought it didn't go far enough.

Reforming authorities delegated to the Federal Energy Regulatory Commission is also on the table, the House Republican aide said.

The Democratic-led FERC angered many Republicans earlier this year when it approved new policy statements to add new hurdles to applicants seeking approval of pipeline projects.

Under the revised policy statements, which FERC later pulled back for further consideration, the commission would more strictly consider the effect of climate change on a given project.

Democratic FERC Chairman Richard Glick said the new policies would enable the commission to avoid lengthy and costly litigation. He pointed to court decisions that have vacated FERC certificates for inadequately considering the greenhouse gas footprints of some projects. Republicans and other critics said FERC's policy statements exceeded its mandate.

Forecasts of ever-growing energy demand in the U.S. and around the globe mean Congress and regulators must make production and transport easier for energy producers, the Republican aide said.

"We cannot afford to be taking energy sources off the table, barring some magical, affordable technology innovation," the person said, "which, you know, can always happen."