John Krull: Who speaks for mom and pop?

In 2018, then President Donald Trump signed into law a “reform” of the Dodd-Frank financial oversight law.

The “reform” altered the requirement for all banks above a certain threshold to undergo annual stress tests and other forms of fiscal scrutiny. Prior to the “reform,” the threshold had been $50 billion in assets. After the “reform,” the new number was $250 billion.

Trump said at the time that the change “was a big deal for our country.”

It turns out he was right about that, but not in a good way.

Two of the banks that the Dodd-Frank alteration allowed to enjoy decreased scrutiny were Silicon Valley Bank and Signature Bank.

The two banks that just failed.

Silicon Valley Bank had roughly $200 billion in assets. Signature had $110 billion.

Not surprisingly, the banks’ leaders were among the loudest voices calling for the “reform.”

Under the original Dodd-Frank provisions, banks at that asset level would have been inspected far more rigorously. It’s impossible to know with certainty, but there’s a good chance that these failures, the resulting economic tumult and the federal government’s scramble to avert disaster all could have been avoided if that “reform” hadn’t taken place.

But it did take place.

That’s the troubling thing.

When the “reform” was pushed through, there were active and well-funded forces working to have the “restrictions” and “burdens” on banks lifted so they could invest more aggressively. In that world, that’s code for assuming greater and greater risks in search of greater and greater rewards.

Silicon Valley Bank swam after startups and venture capitalists. Signature Bank dove into the turbulent waters of new currency forms.

They both sank.

The voices that weren’t heard during this disaster in the making were those of the consumers, the folks who trust banks. They don’t have powerful and well-funded lobbies to make their case for them.

Soothing voices in the worlds of government and finance now say that should not be a worry or even a consideration in this case. Silicon Valley Bank and Signature Bank, they say, were not banks that catered to mom-and-pop depositors.

Furthermore, they also offer the reassurance that taxpayer dollars weren’t used to keep the bank’s depositors from losing their cash. Fees banks pay to the Federal Deposit Insurance Corporation covered the cost of this bailout.

But that’s not much comfort.

This disaster could have had far-reaching implications.

Part of the reason the federal government had to step in so quickly and so decisively is that several major employers who banked with Silicon Valley Bank would have struggled to make payroll if their deposited assets had disappeared or the businesses’ access to them had been delayed in any significant way.

That would have hurt a lot of moms and pops in a hurry.

And the fact that the FDIC ended up guaranteeing deposits of far greater size that it was legally obligated to do sets a precedent. It’s going to make it far more difficult for the FDIC to reimpose the legal limit if there are future crises.

That means banks likely will have to pay still higher FDIC fees in the future.

Eventually, those increased costs will find their way to the consumers.

You know, the folks who weren’t at the table when this “reform” was up for discussion.

The truth is that this is not a partisan issue.

The “reform” passed with bipartisan support—which proves at least two things.

The first is that neither Republicans nor Democrats have a monopoly on short-sightedness. Leaders from both parties too often seem to be able to gaze no further than the ends of their own eyelashes.

The second is that it’s easy for profit-hungry bankers to claim the attention of legislators and presidents.

It’s a lot more difficult for the moms and pops who take the hardest falls when things go wrong.

That needs to change.

It needs to change now.

John Krull is director of Franklin College’s Pulliam School of Journalism and publisher of, a news website powered by Franklin College journalism students. The views expressed are those of the author only and should not be attributed to Franklin College. Send comments to [email protected].