EU Lawmakers Say US Ignoring 'Message of 2008'

Lawmakers in Europe are blaming U.S. regulators for failing to stop this month’s banking crisis.

That’s according to a Thursday (March 23) report by CNBC, citing interviews with regulators and officials in the European Union.

“You need stronger regulation ... in that sense the U.S. lacks some controls,” said Paul Tang, a Dutch lawmaker who sits on the European Parliament’s economic committee.

Asked if American regulators had made errors and therefore failed to prevent the downfall of Silicon Valley Bank and Signature Bank, Tang replied: “I definitely think so, you need to have scrutiny. That was the message from 2008.”

Another EU official, speaking on condition of anonymity, told CNBC that a number of recent meetings between European officials “stressed the failures of regulation [in the U.S.] particularly when compared with the EU.”

The report notes that a key difference between America and Europe is the looser capital rules for smaller banks in the U.S.

“The main difference is the Basel III requirements,” Stéphanie Yon-Courtin, a member of the European Parliament said in an interview with CNBC. “These banking rules,” she said, “apply to very few banks — this is where the problem lays.”

As PYMNTS has noted multiple times in recent days, this crisis is likely to lead to a host of new banking regulations.

It has Congress asking questions, with the House Financial Services Committee set to grill Biden administration officials next week, and a bipartisan call in the Senate for the creation of an inspector general position for the Federal Reserve.

And in a recent interview with Karen Webster, QED Partner Amias Gerety said there’s likely to be a reexamination of existing laws that have made it harder to regulate banks of SVB’s size.

“Increased capital requirements would, in some form, limit at least some of the funds channeled back into a bank’s customer base and in the economy at large but would conceivably be a buffer to shore up demands by depositors and, by extension, prevent bank runs,” PYMNTS wrote recently. “It’s no longer a case of ‘too big to fail,’ but a case of ‘no one’s too small to matter.’”