New banking rules on the table in Utah
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Federal government intervention likely saved thousands of Utah jobs that were imperiled by the failure of Silicon Valley Bank, local tech industry leaders said Monday.
- Meanwhile, the state official responsible for financial oversight said new regulations for banks in Utah could be coming.
What's happening: Federal regulators this weekend guaranteed clients' deposits at SVB and New York-based Signature Bank, which were shuttered in recent days as tech industry clients emptied their accounts.
- Those accounts were largely high-dollar and uninsured.
Why it matters: About half of Utah's tech firms had accounts with Silicon Valley Bank, estimated Gavin Christensen, founder of the Salt Lake-based venture capital firm Kickstart.
- "We knew that hundreds of businesses were impacted, and that means thousands and thousands of employees would have been impacted, and it could have been devastating to our state," Gov. Spencer Cox said Monday alongside Christensen at a virtual town hall.
What we're watching: Darryle Rude, commissioner of the Utah Department of Financial Institutions, said the state is looking at new banking regulations.
- Federal and state regulators will likely review existing rules, with "a lot more emphasis on uninsured depositors and on concentration of risk in certain industries," Rude said.
- "We will put policies and procedures in place to look at these risks," Rude said. "Hopefully we can all work together and come up with a reasonable risk level that keeps the public satisfied."
U.S. Sen. Mitt Romney highlighted potential deposit insurance reform, noting the FDIC insures deposits up to only $250,000 — while many of SVB's clients had much bigger accounts.
- "Anybody with under $250,000 doesn't worry [that they can't get their deposits back]," Romney said in the meeting. "Well, why do we say that people with larger amounts need to worry about it? Should there be an insurance fee charged for all accounts? These are questions that I think we're gonna have to, to sort through"
Of note: Romney's 2012 presidential campaign included a promise to repeal the Dodd-Frank Act, which raised the FDIC insurance cap from $100,000 to 250,000.
U.S. Sen. Mike Lee didn't address any specific potential regulatory changes, saying only: "I do look forward to hearing what the plan is by the regulators moving forward to make sure things like this don't happen in the future."
Lee voted for a 2018 partial rollback of Dodd-Frank that some Democrats and other analysts say could have prevented the ongoing crisis.