It’s Tuesday, the traditional day for elections and for our pause-and-consider newsletter on politics and policy.

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Photo by Rebecca Noble/AFP via Getty Images

3 QUESTIONS ABOUT THE BANKING PROBLEM
By Lisa Desjardins, @LisaDNews ([link removed])
Correspondent

The nation’s latest near-crisis is financial. But soon it will become political.

Working around the clock over the weekend, federal banking insurers acted after Silicon Valley Bank failed and another, Signature Bank, was at imminent risk. Regulators temporarily closed both to avoid disastrous runs on the banks ([link removed]) . (A third bank, Silvergate Capital, also failed but decided to voluntarily close ([link removed]) and wind down assets. It is not currently getting federal assistance.)

Here’s a look at what lawmakers are doing, saying and contemplating. (And why.)

First, a reminder of some key terms:
* The Dodd-Frank Act. The 2010 law that increased regulation of the banking and financial industry, following the 2008 failure and bailout of major institutions. Among other things, it required regular “stress tests” to show that banks could weather financial shocks.

* The 2018 rollback, aka the Economic Growth, Regulatory Relief, and Consumer Protection Act. This deregulation law — passed in 2018 ([link removed]) — removed, or rolled back, some portions of Dodd-Frank and meant small and medium-sized banks no longer had to undergo financial stress tests ([link removed]) .

* FDIC. The Federal Deposit Insurance Corporation. It insures banking deposits, analyzes if financial institutions are sound and works to protect consumers.

Now to some key issues at hand, days after the second-largest banking failure ([link removed]) in U.S. history.
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Watch the segment in the player above.
Did the 2018 rollback cause this?

Expect this to be a fiery debate. Banking reform specialist Sen. Elizabeth Warren, D-Mass., is emphatically asserting that the 2018 deregulation by Republicans and the 2023 bank failures are connected.

On Tuesday, she wrote a letter ([link removed]) to Greg Becker, reminding the former CEO of Silicon Valley Bank that he personally pushed for deregulation in 2015.

“You urged lawmakers to raise the threshold,” for increased monitoring and stronger emergency plans, Warren wrote. “You derided these standards as ‘unnecessary compliance measures.’”

Warren and others with her view believe that had Dodd-Frank stayed intact, Silicon Valley Bank would have been forced, by the act’s standards, to take fewer of the risks that led to its collapse.

But one of Dodd-Frank’s namesakes, former Congressman Barney Frank, said yesterday that he does not think that the 2018 reforms played a role.

“I don’t think that had any effect,” Frank told Bloomberg ([link removed]) . “I don’t think there was any laxity on the part of regulators in regulating the banks in that category,” meaning medium banks the size of SVB or Signature Bank.

Those who disagree point out that Frank sits on the board of Signature Bank and is directly involved.

Is this a bailout?

This is a complicated question, and the answer depends on how you define “bailout.”

The FDIC is removing its usual cap, which guarantees up to $250,000 ([link removed]) for each account. In the case of these banks, corporations had accounts and cash far exceeding that ([link removed]) .

To back up those amounts, the federal government is pulling from the FDIC’s usual insurance fund and assessing a special fee on larger banks, according to Treasury official statements ([link removed]) .

Thus, it is a bailout in the sense that these banks were collapsing and the federal government has rushed in with the funds to make sure no one with money in the bank loses it.

It is not a bailout in other ways. One, the banks have been closed, and the federal government is hoping to liquidate or sell their assets. (The FDIC has created “bridge” banks, like the “Signature Bridge Bank” in the meanwhile, to hold assets before the company is sold.)

In addition, federal regulators have repeatedly said that no taxpayer dollars will be lost in the process.

For more about “bailout” — a word the White House has so far avoided — see this article from NPR ([link removed]) .

What will happen next?

We are in the wait-and-see period, where lawmakers in Washington put out press releases but do not yet debate concrete legislation or hold hearings.

But hearings are ahead — no doubt. Sources tell me timing is still unclear, but both sides of the Capitol are highly motivated to bring in banking executives and regulators to talk about what exactly happened here. The array of questions and issues include: the risks each bank took, how much regulators knew, the role of the cyber-currency industry (a prominent client at one of the banks), how executives handled the meltdown, and the role of Twitter in accelerating a sense of panic.

Legislation is possible, but faces a few hurdles. There are splits within each party about how to respond to these banking meltdowns. And for any bill to get to the president, it must be bipartisan enough to get 60 Senate votes.

Navigating the tricky banking landscape and emerging with 60 votes still intact seems a longshot. But watch in the next two weeks to see who attempts it.
More on politics from our coverage:
* Watch: After two banks collapse, the government takes steps to shore up confidence ([link removed]) around the financial system.
* One Big Question: What’s Congress doing about it? (Hint: A divided Congress is giving a divided response ([link removed]) .)
* A Closer Look: The Biden administration officially approved a controversial oil drilling project ([link removed]) , known as Willow, in Alaska.
* Perspectives: Since Russia’s invasion of Ukraine last year, many Russian journalists have fled rather than risk imprisonment ([link removed]) for not toeing Moscow’s line. Mikhail Zygar explains why he had a moral obligation to leave.

#POLITICSTRIVIA
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Photo by Debbi Smirnoff/Getty Images
By Joshua Barajas, @Josh_Barrage ([link removed])
Senior Editor, Digital

This being a politics newsletter — let’s now talk math. March 14 is National Pi Day ([link removed]) .

It’s a time when number and pie enthusiasts alike celebrate the important mathematical constant of Pi, or π, which symbolizes the ratio of a circle’s circumference to its diameter. The first three digits of Pi — an irrational number that doesn’t end — is 3.14. (Hence why the day’s celebrated on the 14th day of the third month.)

Congress formally recognized the day in 2009. The House passed legislation to mark the day ([link removed]) as a way of nodding to the importance of math and science education programs. The first known celebration of Pi took place at the San Francisco Exploratorium in 1988; museum staffers marked the day by eating pie, a tradition that continues today ([link removed]) .

Our question: March 14 also coincides with the birthday of this influential physicist. Who is it?

Send your answers to [email protected] (mailto:[email protected]) or tweet using #PoliticsTrivia. The first correct answers will earn a shout-out next week.

Last week, we asked: What is the estimated average lifespan of a $100 bill?

The answer: 22.9 years ([link removed]) . According to the Fed’s estimates, the average $1 bill remains in circulation for 6.6 years. The average $10 bill lasts for 5.3 years.

Congratulations to our winners: Rosalyn Gomes and Mike Senman!

Thank you all for reading and watching. We’ll drop into your inbox next week.
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