The first half of 2023 saw the return of bank failures, something that had largely stayed off the front page of newspapers (and websites) since the financial crisis of 2008 . These failures made a variety of financial institutions into household names and opened the door for regulators to once again seek greater influence over the operation of the nation’s banks. One of the most aggressive efforts, the RECOUP Act, was proposed by Sen. Sherrod Brown (D-OH). It seeks to provide unelected regulators with an unprecedented level of control over the lifeblood of our nation.

Silicon Valley Bank is perhaps the most prominent of the 2023 bank failures. This 39-year-old Santa Clara, California, bank built a successful business by catering to both Silicon Valley-based companies and their employees. According to  Mark Williams , a finance professor at Boston University and a one-time bank examiner, Silicon Valley Bank was doing a lot of things right: It saw its deposits triple in just two years and put its money into United States government bonds. What Silicon Valley Bank did not anticipate was the 21-month-long march by the Federal Reserve to raise interest rates as part of an effort to fight inflation.

Under the RECOUP Act, Silicon Valley Bank’s executives and directors could find themselves subject to clawbacks of their compensation and potential banishment from the banking industry. And for what again? The unfortunate result of acts they could neither anticipate nor control. I highlight this to remind the reader that many business failures, be they banks or otherwise, come about because of the unpredictable environment that characterizes any economy — especially one as dynamic as ours.

Not only does the RECOUP Act’s text explicitly grant this power, it is also written in such a vague fashion that regulators would have a nearly unlimited ability to determine who can and can’t serve as a bank executive, and do so with impunity. These powers would apply to a solvent, well-run bank just as much as they would apply to a faltering institution. With bank regulators able to effectively name the leaders of banks and bank holding companies, they will have supplanted bank shareholders as the people in control of nearly every American bank.

Remember, banks are no longer just lenders. They provide infrastructure for the payment systems we use to transfer money between individuals and businesses. They facilitate the operation of key industries such as air travel, hospitality, and car rental. The same goes for many of the app-based services that make our lives easier, such as Uber, Lyft, Amazon, and Crumbl Cookies. Thus, giving unelected government regulators the ability to determine who operates banks (and thus, how they operate) puts an unrestrained government in every corner of our lives — long the dream of totalitarian leaders throughout world history.

Yet, the problems with the RECOUP Act don’t end there. That is because S. 21920 creates a road map for a similar approach to regulation across the whole of American industry. The same arguments used for this level of highly intrusive and unlimited bank regulation can be used to control any industry. Just think: If politicians think automobiles create too much pollution, just use the same framework to allow auto industry regulators to determine who runs car companies. The same goes for oil companies and tire manufacturers. Oh, and if politicians believe you are consuming too much sugar in the large soda you buy at the gas station, just use the RECOUP Act framework to regulate food service companies, too.

While some may dismiss this as unrealistic fear-mongering, history shows us that once limits are taken away from power, it is very difficult to bring them back.

Thus, the prudent path is to preserve the present, balanced regulatory approach, while encouraging the development of a collaborative approach between banks and bank regulators with the goal of greater freedom and opportunity for banks and their customers.

Phil Bell is the Director of External Affairs at FreedomWorks.