U.S. Rep. Ritchie Torres Files Federal Legislation to Address Impact and Risk of Social Media on Stability of America’s Financial Sector
WASHINGTON, D.C. – U.S. Representative Ritchie Torres (NY-15), a member of the House Financial Services Committee, today announced he has filed new federal legislation aimed at addressing the impact and risk of social media and digital platforms on America’s financial stability and institutions.
The “Social Media Bank Run Act” is a direct response to the recent collapse of Silicon Valley Bank – the second largest bank failure in U.S. history – in which depositors reportedly withdrew more than $40 billion in 24 hours, fueled in large part by anxious social media posts and digital messaging apps.
“We no longer live in the days where you have to physically go to the bank to withdraw money,” said Rep. Torres. “The sheer speed of the run on Silicon Valley Bank is historically unprecedented and stands in stark contrast to what we saw unfold during the 2008 economic crisis with a main difference being the prevalence of social media in our everyday lives. Digital platforms enable financial panic to spread on a scale and at a pace we’ve never before seen, and I worry it could enable a malicious foreign adversary to manufacture financial panic online to destabilize America’s financial institutions. Federal banking regulators must be empowered to stay abreast of online conversations and potential financial panic on social media so we can continue to protect and strengthen the integrity of America’s financial stability.”
Rep. Torres’s legislation amends the Financial Stability Act of 2010 to require the Financial Stability Oversight Council, established in 2010 under the Dodd-Frank Wall Street Reform and Consumer Protection Act, to monitor social media platforms for indicators of a bank run or financial panic in addition to their existing responsibility for monitoring the stability of the nation’s financial system.
The Financial Stability Oversight Council would also be required to conduct a study to determine if the content on social media platforms affects financial panic and bank runs and report its findings and determinations to Congress.
The “Social Media Bank Run Act” marks the fourth piece of legislation introduced by Rep. Torres in the days and weeks following the historic failures of SVB in California and Signature Bank in his home state of New York.