Karen Bass skips town as teacher strike disrupts Los Angeles

SACRAMENTO, Calif. — As tens of thousands of Los Angeles teachers and school workers prepared to walk off the job, Mayor Karen Bass was nearly 400 miles away at the state Capitol accepting an award.

Bass, the newly elected mayor of America’s second-largest city, has gone out of her way to avoid a public role in the bitter fight while insisting she has been actively involved behind-the-scenes to head off massive disruptions from a three-day strike that started Tuesday.

“I consider this of the utmost importance, and that is why I am personally engaged,” she said in an interview shortly after returning from Sacramento, where she received the award from the Legislature’s Women’s Caucus.

The mayor has no direct authority over the Los Angeles Unified School District. But the strike, which will force tens of thousands of parents to scramble for childcare and some kids to skip meals, is the first real test for Bass — a former member of Congress who beat a well-funded challenger to win in November and become the first Black woman to lead the city.

Bass has, so far at least, kept a low-profile despite her considerable influence in the city. That decision also stands in stark contrast to her two predecessors, who chose to get actively involved in education issues as mayor.

She is being pushed by some to be more vocal publicly, especially because of her deep ties to labor. A walkout by Local 99 of the Service Employees International Union, which represents cafeteria workers, custodians and other school staff, triggered a sympathy strike from teachers.

“If she were to get involved, it would be a game changer,” said Jackie Goldberg, president of the LAUSD school board. “With her personal relationship with SEIU and its leadership, I think she would be able to be very persuasive.”

But Bass said she’s not interested in making the labor dispute about her, and that getting too involved publicly could disrupt the process.

“I'm a person that stays focused on the goal, and I keep my eyes on the prize,” the mayor told POLITICO. “I have no need to grandstand.”

The strike, which is scheduled to run for three days and will keep more than 400,000 kids out of school, is a challenge for the city — and Bass, who until now has been focused on addressing homelessness and quality-of-life issues in Los Angeles.

There’s precedent for a higher-profile role: Her two predecessors as mayor, Eric Garcetti and Antonio Villaraigosa, were heavily and publicly active in LAUSD issues while in office.

The Los Angeles Democratic Party has publicly supported SEIU Local 99, and Congressman Adam Schiff, who is running for Senate, was picketing in the rain Tuesday alongside school workers.

Bass says that’s just not her style. A former community organizer, speaker of the state Assembly and member of Congress who was known for working across the aisle, she said she has intentionally stayed in the background — and that she offered to help broker a solution.

“When I said that I am constantly in communication, I meant exactly that,” she said. “I do not mean that somebody was in communication on my behalf.”

She said she’s made it clear to all sides that she doesn’t want to see a strike, but that the working conditions and salaries of classified employees — who on average make $25,000 per year — are unacceptable.

School workers declared their intention to strike last Wednesday, as talks with the district stalled after more than a year. The union, which says it wants raises of 30 percent to take the average annual salary to about $36,000, represents about 30,000 employees.

The district, led by Superintendent Alberto Carvalho, countered with 20 percent over several years plus a 3 percent bonus and improved health care benefits — and kept publicly hoping for a settlement up until Monday while Bass was in Sacramento.

United Teachers Los Angeles, which represents more than 35,000 educators, is separately seeking an increase in pay of 20 percent, has urged its members not to cross picket lines.

Max Arias, executive director for SEIU Local 99, said in a statement late Monday that a planned negotiation session with the district was called off after details about it were leaked in news reports. The union had previously said it was not interested in negotiating, as both sides complete a state-mandated mediation process with the Public Employment Relations Board.

The mayor has no statutory power over the autonomous school district but says she’s ready to mediate if it would help. Villaraigosa, who served before Garcetti, said Bass is limited by the fact that the two sides are apparently not ready to negotiate right now.

Both Villaraigosa and Garcetti garnered national headlines for their public engagement with LAUSD, a sprawling bureaucracy that includes a number of different cities and towns.

Garcetti and his team served as mediators between the district and UTLA in 2019, months after publicly offering up the idea. Villaraigosa went as far as to propose the city take over the district, an idea that eventually failed.

But former city officials say those situations are not direct parallels to the latest labor dispute.

“The parties have to want your help, and right now I don’t think they are close enough,” Villaraigosa said.

Once both sides are ready to hash out a deal, Bass is likely to be thrust into a more prominent position in negotiations. That’s a role longtime political observers say her decades in the state Legislature and Congress have primed her for.

“I think that collaborative, behind-the-scenes style can be very effective when it comes to bringing warring sides together,” said Ana Guerrero, who served as Garcetti’s chief of staff. “Because the mayor, if they're effective when it comes to these situations, they don't take a side, they don't wag their finger.”

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Biden creates national monuments in Nevada and Texas

This story was updated at 2:30 p.m.

President Joe Biden on Tuesday announced the creation of two national monuments in Nevada and Texas, and directed the study of a possible marine sanctuary southwest of Hawaii that's so large it would allow the administration to meet its goal of conserving 30 percent of the nation's waters.

“Our natural wonders are literally the envy of the world. They’ve always been and they always will be," Biden said at the Interior Department headquarters as he touted his administration's conservation record and the new monument designations. "They’re central to our heritage as a people and they’re central to our identity as a nation.”

Biden used his authority under the Antiquities Act of 1906 to establish not only the Avi Kwa Ame National Monument on lands considered sacred to Yuman-speaking Native American tribes in southern Nevada but also the nearly 7,000-acre Castner Range National Monument in northern El Paso, Texas.

The former Army artillery range and testing ground in the Chihuahuan Desert in western Texas includes unique wildlife and archaeological resources showing evidence of human habitation dating back 10,000 years, when the area was home to the Apache and Pueblo peoples and the Comanche Nation, the Hopi Tribe and the Kiowa Tribe of Oklahoma.

Biden also signed a presidential memorandum directing Commerce Secretary Gina Raimondo to evaluate using her authority under the National Marine Sanctuaries Act to designate a marine sanctuary covering an enormous 777,000 square miles — including the existing Pacific Remote Islands Marine National Monument, southwest of Hawaii — within the next 30 days.

A new marine sanctuary at that size would allow the Biden administration to reach the goal outlined in the "America the Beautiful" initiative to conserve 30 percent of the nation's waters by 2030, the White House said.

The conservation announcements come a week after Biden enraged environmentalists and climate activists with the Interior Department's approval of the massive Willow oil and gas project in the Arctic. The administration has defended the move, saying oil company ConocoPhillips held leases and that, legally, Interior didn't have much room to maneuver.

But the White House also emphasized its pledge to increase protections in the Arctic Ocean and the National Petroleum Reserve-Alaska, where the Willow project will be located. Those moves were announced the night before the Willow project decision was released.

On Tuesday, the administration also unveiled a suite of new policies, including what the White House is calling the first-ever "United States Ocean-Climate Action Plan," which will serve as a road map to potentially utilize "the power of the ocean" for energy production, among other things.

The White House Council on Environmental Quality will also issue guidance to federal land management agencies to incorporate "ecological connectivity" and the designation of wildlife corridors "into federal planning and decision-making" documents, like resource management plans.

For example, the White House said the Bureau of Land Management in the coming weeks will seek public comment on the development of a rule that would "update and modernize" the way the bureau manages the 245 million acres under its jurisdiction.

The Biden administration also announced a memorandum of understanding among the Fish and Wildlife Service, National Alliance of Forest Owners, and National Council for Air and Stream Improvement Inc. that focuses on protecting at-risk and federally protected species on "private working forests nationwide," the White House said.

But the highlight was the designation of the Avi Kwa Ame and Castner Range national monuments.

The initial proposal for the Avi Kwa Ame National Monument called for preserving roughly 450,000 acres of BLM-managed lands, but White House press materials indicate it will include at least some Bureau of Reclamation and National Park Service lands, as well, increasing the size of the monument to 506,814 acres.

“It’s a place of reverence, it’s a place of spirituality and it’s a place of healing," Biden said of the Nevada monument. "And now it can be recognized for the significance it holds and be preserved forever.”

The Interior Department will enter into a memorandum of understanding to manage the new monument with tribal nations that consider the lands along the Nevada-California border sacred, including the Fort Mojave Indian Tribe and nearly a dozen others in Nevada and Arizona, the White House said.

The Avi Kwa Ame National Monument also apparently did not carve out 2,000 acres, as requested by San Francisco-based renewable energy developer Avantus, that the company needed to build the 400-megawatt Angora Solar Project, according to the White House.

But, regardless, the White House said in press materials, "The designation will not slow the positive momentum of clean energy development in the State of Nevada."

The Castner Range National Monument was slightly smaller than the 7,000 acres advocates had proposed, consisting of 6,672 acres on Fort Bliss that make up "the southern component of the Franklin Mountain range, just outside of El Paso," according to the White House.

The Army, which will manage the national monument site, ceased training operations there nearly 60 years ago.

"It's just breathtaking," Biden said of Castner Range. “The people of El Paso fought to protect this for 50 years. Their work has finally paid off.”

The White House also promoted the Castner Range designation as a step toward providing more access to federal lands for low-income and underserved communities in the region. However, the Army will need to clean up the site, which as a former military training ground is littered with unexploded artillery.

The Avi Kwa Ame and Castner Range national monuments will cover a combined 514,000 acres, marking by far the largest public lands preservation move of the Biden administration.

Biden pledged last fall to protect the Avi Kwa Ame area during the White House Tribal Nations Summit, about a month after he designated the 58,804-acre Camp Hale-Continental Divide National Monument — his first — which protects a historic World War II Army camp and surrounding peaks in the Tenmile Range in Colorado’s Rocky Mountains. The Forest Service manages the monument.

Reporter Robin Bravender contributed.

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Advocates praise new monuments, but work remains on access

The White House announcement that President Joe Biden on Tuesday will designate two long-sought-after national monuments in Nevada and Texas drew widespread praise from Native American tribal leaders, residents and conservation groups.

But it also raised questions about how the Biden administration will protect the sites and allow them to be fully enjoyed by the public.

What is clear is that the moves rank among the largest conservation initiatives undertaken by any administration in decades (Greenwire, March 21).

The centerpiece is arguably the Avi Kwa Ame National Monument, which will permanently protect 506,814 acres of federal lands considered sacred to Yuman-speaking Native American tribes in southern Nevada and serve as a connecting point between the Mojave National Preserve and the Castle Mountains National Monument to the west, in California, with the Lake Mead National Recreation Area to the east in Nevada.

While Biden vowed last year to protect that Nevada site, the announcement that the president will also designate the Castner Range National Monument in West Texas was unexpected, even as it strikes a core administration goal to increase access to parks and open spaces to marginalized communities. Biden will announce the monuments at an event Tuesday afternoon at the Interior Department.

To the residents of El Paso, especially in the poorer northern end of the city who have pushed for decades to preserve the old Army training grounds that are now renowned for the annual bloom of Mexican gold poppies each spring, the 6,672 acres are a valuable open-air space that connects to the eastern slope of the Franklin Mountains.

"I’m absolutely thrilled about the designation," said Rep. Veronica Escobar (D-Texas), who in 2021 sponsored legislation that, if successful, would have established the national monument. "It brings me such joy to know that El Pasoans will soon be able to enjoy the beauty of this majestic, expansive landmark for years to come."

Now comes the hard part.

Despite the designation of Castner Range National Monument on Tuesday as the third national monument in Texas, the former Army artillery range and training grounds remain, as they have for decades, closed to the public.

When people will actually be able to walk and recreate on the monument is an open question.

Though the Army stopped using Castner Range in 1966, its legacy of decades of use as a military training ground, beginning in 1926, have left it littered with unexploded artillery.

If you want to see the Mexican gold poppy blooms that carpet the desert floor at the site each spring, you need to walk along a 1-mile trail at the El Paso Museum of Archeology on the perimeter of the site.

And while supporters of designating Castner Range a national monument say its establishment provides disadvantaged communities in El Paso with much-needed recreational benefits, those also won't be realized until it is made safe to visit.

The monument area is part of the Fort Bliss and will be managed by the Army.

Undersecretary of the Army Gabe Camarillo, who is an El Paso native, visited the Castner Range area last August and pledged to complete cleanup of unexploded ordnance there.

Camarillo said in a Tuesday statement that while Castner Range "has been an indelible part of U.S. Army history," he added that "now it’s time to write a new chapter about the future of this natural treasure."

He added: "Moving forward, the U.S. Army stands ready to execute a complete clean up, manage remaining munitions and make Castner Range safe for public access."

As it stands today, little is known about what wildlife and plant species reside there, as well as the archeological resources.

National monument proponents say that as many as 27 wildlife or plant species that the Fish and Wildlife Service have listed for protection under the Endangered Species Act are present on the Castner Range site. Those include the ferruginous hawk, the Texas horned lizard, and the Franklin Mountains talus snail, among others.

The site in the Chihuahuan Desert also includes archaeological resources showing evidence of human habitation dating back 10,000 years, when according to a White House fact sheet the area was home to the Apache and Pueblo peoples and the Comanche Nation, the Hopi Tribe and the Kiowa Tribe of Oklahoma.

"Now we can get the real work of interpretation and narrative around Castner Range, providing access and context at the same time," said Eric Pearson, president and CEO of the El Paso Community Foundation, which helped spearhead local efforts to get the new monument.

An expanded Nevada monument

The Avi Kwa Ame National Monument will be slightly larger than what had been originally proposed by advocates and Rep. Dina Titus (D-Nev.) in legislation she sponsored last year to establish the monument that stalled.

The initial proposal for the Avi Kwa Ame National Monument called for preserving roughly 450,000 acres of BLM-managed lands, but White House press materials indicate it will include at least some Bureau of Reclamation and National Park Service lands, as well, increasing the size of the monument to 506,814 acres by adding parcels in the Lake Mead National Recreation Area.

"President Biden’s establishment of Avi Kwa Ame National Monument is a testimony to protecting and preserving lands with not just our children and grandchildren in mind but for generations to come," Theresa Pierno, president and CEO of the National Parks Conservation Association, said in a statement.

Biden pledged to protect the area during a speech at the White House Tribal Nations Summit in Washington last year, saying he understood that it is a “sacred place that is central to the creation story of so many tribes” (Greenwire, Nov. 30, 2022).

The Avi Kwa Ame National Monument will protect biologically diverse and culturally significant lands in the Mojave Desert. Straddling the Nevada-California border, it's nestled between the Mojave National Preserve; the Castle Mountains and Mojave Trails national monuments in California; and the Lake Mead National Recreation Area and four wilderness areas on the Nevada side of the border, including the Spirit Mountain Wilderness Area outside the eastern boundary of the monument that's home to the region's 5,600-foot-tall namesake peak.

"The president’s action today will safeguard hundreds of thousands of acres of cultural sites, desert habitats, and natural resources in southern Nevada, which bear great cultural, ecological, and economic significance to our state," the Honor Avi Kwa Ame coalition comprised of Native American tribal leaders, local government officials, conservation groups and residents said in a statement.

The Interior Department will enter into a memorandum of understanding to manage the new monument in cooperation with tribal nations that consider the lands along the Nevada-California border sacred, including the Fort Mojave Indian Tribe and nearly a dozen others in Nevada and Arizona, the White House said. However, the presidential proclamation says that the Bureau of Land Management will have "primary management authority" over sections of the landscape it already controls, and the National Park Service will have primary oversight of sections of the new monument that include Lake Mead NRA.

"Together, we will honor Avi Kwa Ame today — from its rich Indigenous history, to its vast and diverse plant and wildlife, to the outdoor recreation opportunities created for local cities and towns in southern Nevada by a new gorgeous monument right in their backyard," the coalition said.

The need to protect the Avi Kwa Ame site has been underscored the past few years by strong interest from renewable energy developers.

For example, a solar energy developer had proposed a commercial-scale project on more than 2,500 acres of BLM lands, including 2,000 that were inside the proposed monument boundary.

The White House said Tuesday that the Avi Kwa Ame National Monument designation "will not slow the positive momentum of clean energy development in the State of Nevada," where BLM is processing roughly 36 renewable energy applications for projects with a capacity to produce 13,000 megawatts of electricity, or enough to power about 4 million homes.

Massive Pacific Islands sanctuary?

Biden on Tuesday will also sign a presidential memorandum directing Commerce Secretary Gina Raimondo to evaluate using her authority under the National Marine Sanctuaries Act to designate a marine sanctuary covering an enormous 777,000 square miles — including the existing Pacific Remote Islands Marine National Monument, southwest of Hawaii — within the next 30 days.

A new marine sanctuary at that size would allow the Biden administration to reach the goal outlined in the "America the Beautiful" initiative to conserve 30 percent of the nation's waters by 2030, the White House said.

The White House said Tuesday that the vast area of the Pacific Ocean would encompass "all areas of U.S. jurisdiction around the islands, atolls, and reef of the Pacific Remote Islands," protecting a region that "has a rich ancestral tie to many Native Hawaiian and Pacific Island communities."

In addition, the review of the area for possible designation "would allow the National Oceanic and Atmospheric Administration to further explore the area’s scientific, cultural, and ancestral linkages, and tailor its management accordingly," according to a White House fact sheet.

The process to explore a possible sanctuary designation will also include Raimondo working with Interior Secretary Deb Haaland to "conduct a public process to work with regional Indigenous cultural leaders to appropriately rename the existing Pacific Remote Islands National Monument, and potentially the Islands themselves, to honor the area’s heritage, ancestral pathways, and stopping points for Pacific Island voyagers," the fact sheet said.

Environmental groups were largely pleased with Tuesday's announcements, which in addition to the two national monuments and possible marine sanctuary also are expected to include new initiatives on tapping the ocean for renewable energy and committing federal land management agencies to incorporate establishing wildlife mitigation corridors and other measures into land-use planning.

But they were also stung by Interior's approval last week of the massive Willow oil and gas project in the Alaskan Arctic. The administration has defended the move, saying that Interior didn't have leeway to void oil company ConocoPhillips' leases (Greenwire, March 17).

“I’m glad to see President Biden taking these modest but important steps for conservation, but his actions on fossil fuels still leave us in a deep hole," said Randi Spivak, public lands program director for the Center for Biological Diversity. "As the climate crisis accelerates and unravels our planet’s biodiversity, it’s clear we can no longer afford to stroll toward solutions. It’s time for the Biden administration to start sprinting."

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Four more Oath Keepers convicted of Jan. 6 felonies

Four more members of the Oath Keepers were convicted Monday of conspiracy to obstruct Congress’ Jan. 6 proceedings, bringing the number of members of the group found guilty by juries of felonies related to the Capitol attack to more than a dozen.

Jurors found Sandra Parker, Laura Steele, Connie Meggs and William Isaacs each guilty of the most significant charges they faced: conspiracy to obstruct Congress’ proceedings, obstruction of an official proceeding, and conspiracy to prevent a federal officer from discharging duties.

The four were also found guilty of several other charges they faced, including destruction of government property.

The convictions add to a growing roster of Oath Keepers who are facing lengthy prison terms for their role in the events on Jan. 6. Stewart Rhodes, the group’s national leader was convicted in November of seditious conspiracy, along with Kelly Meggs — husband of Connie Meggs. In a second trial, four other Oath Keepers were convicted of seditious conspiracy: Roberto Minuta, David Moerschel, Joseph Hackett and Ed Vallejo.

Across the three multi-defendant trials, prosecutors have portrayed the group as a key driver of events on Jan. 6, conspiring to prevent the peaceful transfer of power from Donald Trump to Joe Biden, with some of them prepared to turn violent to achieve that end. Prosecutors noted that they had amassed a stockpile of weapons that they stashed at a hotel in Arlington, Va. that they discussed ferrying into Washington if the events had turned even more violent than they did.

Oath Keeper defendants argued that they were simply in Washington to perform security details for VIPs at Trump’s rally, which preceded the violent riot at the Capitol.

Monday’s verdict was less clear for two other defendants in the third Oath Keepers trial: Bennie Parker and Michael Greene.

Parker, who didn’t go into the Capitol, was acquitted of obstruction and conspiracy to prevent an officer from discharging duties, but the jury was deadlocked on whether he conspired with other Oath Keepers to obstruct Congress’ proceedings.

Greene was acquitted of that charge, and of conspiracy to prevent an officer from discharging duties, but the jury was stuck on whether he participated in the actual obstruction of Congress’ Jan. 6 session. Greene was also acquitted of evidence tampering.

Both men, however, were convicted of misdemeanor counts of entering and remaining in a restricted building. The jury will continue to deliberate on the two deadlocked charges to see if it can return a unanimous verdict.

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Biden issues first veto, knocks Marjorie Taylor Greene

President Joe Biden on Monday vetoed his first bill, blocking the repeal of a Labor Department rule that permitted retirement investing tied to environmental and social goals.

The veto was expected, after the Biden administration fought Republican-led efforts to pass the rollback three weeks ago. The House and Senate votes attracted support from three Democrats, including Sens. Jon Tester of Montana and Joe Manchin of West Virginia— moderates who are up for reelection next year.

"This bill would risk your retirement savings by making it illegal to consider risk factors MAGA House Republicans don't like," Biden said on Twitter Monday. "Your plan manager should be able to protect your hard-earned savings — whether Rep. Marjorie Taylor Greene likes it or not."

While Republicans who led work on the repeal didn't get it signed into law, it marked a partial victory for conservatives who have targeted the rule and other policies that they say encourage major corporations to elevate climate and social goals in their business practices.

"This is trying to parallel financial return with an ideological push," Sen. Mike Braun (R-Ind.), who led the rollback push with Rep. Andy Barr (R-Ky.), told reporters in February. "I don't like that."

The Biden Labor Department rule at issue attempted to undo Trump-era policy that discouraged retirement plan managers from incorporating environmental and social factors into investment decisions. The Biden rule allows them to do so but does not require it.

Wall Street firms and their trade groups largely stayed on the sidelines during the fight, despite being the subject of criticism from Republican lawmakers. Lobbyists were confident that Biden would veto the repeal, and the industry is also laying low as the issue makes its way through the courts. The state of Texas is leading a multi-state lawsuit to block the rule.

“There's just no upside,” said one trade association representative, granted anonymity to speak candidly. “Why bother, especially when you've got 25 state attorneys general who have already said they’re going to pony up and litigate?"

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‘What were the last 15 years for?’: How Fed bank regulation failed

When Congress rewrote the rules for Wall Street following the 2008 financial crisis, it put the Federal Reserve at the center of oversight for the nation’s wounded banks.

Now, the Fed is at the center of a political firestorm as Washington looks for culprits in a new banking crisis.

Republicans like Sens. Bill Hagerty and Thom Tillis are criticizing the central bank for failing to head off the collapse of two lenders. Democratic Sens. Tim Kaine and Michael Bennet want to know whether the Fed failed to do its job. Sen. Elizabeth Warren is faulting steep interest rate hikes for fueling the problem. Even the Fed’s decision to launch a review of what went wrong is being slammed by some as an investigation of itself.

“The Fed has mishandled this about seven different ways,” said Peter Conti-Brown, a professor at the Wharton School of the University of Pennsylvania and a leading expert on the central bank and its history.

The banking turmoil is sparking not only external scrutiny but also internal soul-searching at the Fed, raising fundamental questions about the central bank’s effectiveness at supervising the industry, whether the sweeping post-crisis laws and regulations were even sufficient, and if their partial rollback in 2018 undermined the ability of regulators to stop the collapse of Silicon Valley Bank and other lenders.

At the same time that it is facing questions about whether it could have prevented the bank failures, the Fed is contending with the fallout: A weakening financial system could have severe ramifications for the broader economy, a concern that Fed policymakers will have top of mind when they meet on Wednesday to decide whether to raise interest rates again to battle inflation. The turmoil has heightened the chances that they will hold off on another rate hike out of concern for financial stability.

That concern was enough to drive the Fed, the Treasury Department and the FDIC to take aggressive action this month to end days of global panic, agreeing to back all depositors at SVB and Signature Bank and to prevent runs on any other financial institutions.

Shortly afterward, the central bank said it would conduct a review of what went wrong to be led by its regulatory chief, Michael Barr, who took the Fed job in July 2022 — after the key post was left vacant for nine months.

Among other things, Barr will be looking at the responsibility of the central bank and the San Francisco Fed, the regional branch that had direct oversight over SVB.

He will also be diving headfirst into a roiling debate about whether the bank deregulation law passed in 2018, and its implementation by Barr’s Trump-appointed predecessor, are to blame. This could be an uncomfortable assignment: Barr’s boss, Fed Chair Jerome Powell, also oversaw that regulatory rollback — prompting Warren to call on Powell to recuse himself from the review “for the Fed’s inquiry to have credibility.”

Barr had already been considering toughening standards for larger banks — and facing resistance from Republican lawmakers. But the latest saga has prompted the Fed to focus more on regional lenders with between $100 billion and $250 billion in assets. according to a person familiar with the central bank’s thinking, who was granted anonymity to talk about sensitive issues.

The 2018 bipartisan law was designed to ensure that lenders with between $50 billion and $250 billion in assets — then covering about two dozen of the country’s largest banks, including SVB — no longer faced a range of strict rules that apply to their bigger counterparts like Goldman Sachs and Wells Fargo.

Randal Quarles, the top Fed bank regulator under former President Donald Trump, will implicitly feature in the review, though some of the specific risks at SVB from rising interest rates built up after his departure.

“The changes we made didn’t have anything to do with anything that was happening at Silicon Valley Bank or Signature,” Quarles, who served as Fed vice chair for supervision, said in an interview.

But Daniel Tarullo, who was in charge of regulation at the Fed under President Barack Obama, called for a look at not only the rules but also how they were enforced. “There’s clearly a supervisory gap there,” he told POLITICO.

The Fed under Quarles was given considerable discretion in how to implement the law — and eased up on some institutions that were even larger than $250 billion, although much less so for the megabanks like JPMorgan and Goldman Sachs.

Mark Calabria, who at the time of the 2018 rollback was chief economist to Vice President Mike Pence, rejected complaints by Democrats that the follow-up law gutted Dodd-Frank, the landmark 2010 legislation that was the biggest overhaul of financial rules since the Great Depression.

“I tried to gut Dodd-Frank,” said Calabria. “It was not successful.”

“People who bought into ‘Dodd-Frank ended bailouts’ now have to admit it doesn’t,” he added. “Put me in the camp of, no, there was no massive deregulation that caused this to happen.”

The central difficulty in parsing whether any regulation might have helped prevent this moment is that no bank is able to withstand a run.

One key question is whether SVB had sufficient capital to absorb losses. It held a lot of U.S. government debt and mortgage-backed securities that had decreased in value — rising interest rates meant newer bonds offered better yields — but those bonds still paid interest and would’ve eventually matured without incident.

The biggest banks are required to make sure they have the funding to cover losses if they have to sell such assets in case of unexpected turbulence. But regional and small banks aren’t — and the Fed under Quarles allowed even fairly large banks to opt out of that rule.

Former Fed official Lael Brainard, now a top White House adviser, warned at the time that it was unwise to allow large regional banks to avoid that requirement.

But Quarles noted that SVB was still small enough, at roughly $200 billion in assets, that those rules wouldn’t have applied to it now, even absent that change.

The person familiar with the Fed’s thinking said supervisors formally flagged interest rate-related risks to SVB.

Rules governing banks’ cash on hand also might not have helped SVB withstand the run from depositors that ensued. But they might have given regulators an earlier clue that the bank was getting squeezed, before it started dumping assets, said Mayra Rodriguez Valladares, who runs a consulting firm for bank examiners and financial institutions.

“They did have some information,” she said, “but that stuff is only coming in — some of it every month, some of it every quarter.” The biggest banks, in contrast, report information to their regulators about their high-quality, easily sellable assets every day.

Bank examiners from the Fed, though, are also in the crosshairs for failing to prevent the collapse. “You don’t want to calibrate your regulations to capture the most vulnerable bank you can imagine, because if you do that, you’re overregulating most of the banks and that will have a deleterious effect on households and businesses,” Tarullo said.

“Part of [the examiners’] job is to monitor compliance with regulations, but a big part of their job is to identify when a particular bank has assets or activities that are creating risks significantly beyond those you would normally expect in a bank of its relative size and profile,” he added. “For every supervisor, rapid growth is a warning sign.”

He said he was worried that oversight of banks had been relaxed in recent years, an implicit reference to Quarles’s tenure.

For his part, Quarles said that was not his goal, but rather to increase due process for companies in a closed-door environment where examiners have the power to demand changes without explaining their reasoning or to take legal action without prior notice.

“The point was never to lighten supervision,” he said.

Conti-Brown said the 2018 law also likely played a role in this respect.

Congressional direction like the deregulation bill “shifts supervisory priorities,” he said, in this case away from regional lenders. “The Fed certainly acted as though it did. And supervision was a decisive factor. Did [the law] make it so the San Francisco Fed felt like it couldn’t over the last three years tell SVB how to run a better bank? That seems plausible to me.”

Conti-Brown said the entire episode is unsettling.

“Either the Fed and the Treasury have dramatically overreacted and in the process put public money and public credibility behind very wealthy individuals and companies, which were not legally entitled to that support,” he said. “On the other hand, if they did exactly what we need financial regulators to do, that tells us that our banking system is so woefully fragile that a single medium-sized bank will throw us into a Fed-declared financial crisis.”

“That makes me wonder, what were the last 15 years for?”

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Ukraine grain export deal extended for 120 days

More than 20 million tons of Ukrainian produce have been transported under the initiative so far.

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