Congress remains divided over bank failure solutions

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The collapse of the Silicon Valley Bank and First Republic Bank has caused an uproar among the American public. The federal government has rushed to stifle fear as new bills are quickly being penned and filed through Congress with hopes of nipping this problem in the bud before the point of no return. President Joe Biden proclaimed to Congress that there need to be stronger regulations in place for banks to prevent any other further disruption, but Congress members seem to be divided on how to go about this in practice.

While both sides of the political aisle are angry, there are a few “quick” legislative risks. Additionally, there are a variety of reasons why Congress may not want to make stricter rules for banks. Banks and financial institutions often have significant lobbying power and can use their influence to sway lawmakers in their favor. Stricter rules for banks could increase their operating costs and lead to reduced lending, which could have a negative impact on the economy. Congress may also need to balance the interests of various stakeholders, including consumers, businesses, and financial institutions when considering new regulations.

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