Donald Trump – Blame Him for Silicon Valley Bank Downfall? In the wake of the Silicon Valley Bank’s collapse, the blame game has begun – with many critics focusing their blame on Donald Trump and the Republicans.
Before falling apart last week, SVB had served as the primary lender to tech firms and startups. What happened?
SVB announced last Wednesday that “it had sold a number of securities at a loss, and that it planned to sell $2.25bn in new shares to help right its balance sheet,” The Independent reported.
The SVB announcement triggered a panic. Venture capital firms told their companies to withdraw their money from SVB, and the companies complies. “This spiraled into a bank run, leaving the institution’s stock to plummet.”
Federal regulators have since stepped in to take control of SVB – while critics have mobilized to assign blame for the bank’s failure.
Donald Trump earning some blame for SVB failure
Twitter pundits were quick to assign blame for SVB’s failure on Donald Trump and Republican members of Congress.
Howard Forman, a Yale professor, wrote “Here is the list of Senators who voted to REDUCE the regulatory oversight of Silicon Valley Bank (SVB) in 2018, signed into law by then President Trump. Maybe ask them why they did this?” Forman cc’d Marco Rubio, Lindsey Graham, Rand Paul, and Mark Warner on the tweet.
David Sirota, who founded The Lever, tweeted “Quick reminder: 50 Republican senators and 17 Democratic senators voted to ignore warnings and weaken risk regulations for Silicon Valley Bank. Donald Trump signed the bill into law. And now the bank is the 2nd biggest bank collapse in American history.”
“It’s almost like there’s a connection between deregulating banks and banks taking on unmanageable levels of risk,” one Twitter user responded.
Experts, who spoke with The New York Times, echoed similar sentiments, arguing that a bank of SVB’s size “might have managed its interest rate risk better had parts of the Dodd-Frank financial-regulators package not been rolled back under President Trump.”
The Obama administration signed the Dodd-Frank Act into law, in response to the Great Recession (which occurred after the banking collapse of 2007). The Dodd-Frank regulations “reduced the frequency of Federal Reserve-conducted stress tests for banks whose assets totally between $100bn and $250bn.”
SVB was quick to blame inflation – with some merit. “Higher borrowing costs throttled the gains of tech stocks that could have benefitted the bank,” The Intercept reported. “And a significant drop in available VC funding floating around forced companies to withdraw their holdings.”
But external factors, like inflation, are not solely to blame.
SVB’s President pushed for deregulation
Eight years ago, SVB’s president, Greg Becker, pushed Congress to reduce scrutiny on SVB, on account of the “low risk profile of our activities and business model.” Becker also cited “SVB’s deep understanding of the markets it serves” and “strong risk management practices.”
Right. Three years (and half a million dollars in lobbying) later, Congress adhered to SVB’s request. And now, SVB has failed, prompting the Federal Deposit Insurance Corporation to step in and take over the bank. Apparently, SVB has not had a chief risk officer for months; and 90 percent of SVB’s deposits were uninsured.
The SVB collapse strikes a sensitive spot in the American psyche, the bundle of nerves left exposed after the 2008 collapse –and the subsequent bailout.
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Harrison Kass is the Senior Editor at 19FortyFive. An attorney, pilot, guitarist, and minor pro hockey player, Harrison joined the US Air Force as a Pilot Trainee but was medically discharged. Harrison holds a BA from Lake Forest College, a JD from the University of Oregon, and an MA from New York University. Harrison listens to Dokken.
Walker
March 14, 2023 at 7:30 pm
Why is Kass so afraid to call a spade a spade? Instead he lets others make the call and just reports on it without saying it straight himself.
Republicans and Trump are the cause. Sure they didn’t make SVB make risky choices but they set into play the ability for SVB to do it against Democrats warnings.
Republicans always try to tell us that all regulations are bad. But the truth is always too complicated for black and white Republicans to grasp. Regulations are what keep us safe from unscrupulous actors, but they can also be overbearing. It isn’t a question of whether we need regulations or not. We need them. The harder part is getting the right balance between regulation and flexibility.
Jacksonian Libertarian
March 14, 2023 at 7:58 pm
Leftist Culture has destroyed every people it has dominated. Leftist Culture is the worst of the Authoritarian Cultures.
American Culture is the most successful culture in history. 1st of the 1st World cultures, the one all others had to emulate to become affluent 1st World cultures.
Trump is American Culture’s chosen leader, because he has shown he will fight for American Culture. This fact terrifies Leftist Culture, and they attack Trump with everything they can lay their hands on.
But blame for Leftist Culture’s failures can only be laid at their own feet, and the historical evidence of 100% failure proves it.
Leftist attacks on “The Declaration of Independence”, “The US Constitution”, Private Property, Freedom of Speech, the Integrity of the Vote, Gun ownership, the Sciences, etc. will make American Culture stronger if it survives.
Culture does not refer to food, arts, or language which anyone can use. But rather to fundamental beliefs in politics, law, and the Universe.
Def: American Culture –
1. Reverence for the Declaration of Independence, and the US Constitution are fundamental to American Culture.
2. American Culture considers gun ownership, and the duty to use them for self/national defense against all enemies foreign and domestic, mandatory. You are not American Culture if you don’t own a militia long gun and are prepared to use it. A shotgun, a box of shells, and the willingness to use them, is a cheap price to belong to the most successful culture in history.
3. American Culture has evolved on racism, from the Declaration of Independence (1776) which stated the aspirational “All men are created equal” but was signed by people that owned slaves or indentured servants. Through the Civilwar (1865) which freed all slaves (from the Leftist Democrats) at a bloody cost, the (1920) Amendment giving Women the vote, to (1963) MLK’s coined “Judge others by the content of their character” which has become the American Cultural Standard. Americans don’t judge others by their Race or Sex, however judging them by the content of their character is mandatory.
4. American Culture believes that everyone must be treated equally before the law for there to be Justice. But also, that everyone is unique, and that “equality only applies to individuals and Justice”, and not to any groups or what anyone believes is Fair.
5. The Leftist multicultural belief that all Cultures are equal, is false to American Culture. A Culture is part of a person’s “character”, so all Cultures are subject to criticism and judgement. Islamic Culture, Leftist Culture, Authoritarian Culture, and Urban Black Gangster Culture are a few of the malignant cultures American Culture judges as contemptible.
6. American Culture is law abiding and Just, not because its members aren’t ruthless, blood thirsty, armed to the teeth, cold eyed killers, which fantasize about legal opportunities for murder and mayhem, but because it’s the best strategy for getting filthy rich, as 1st World affluence has proven.
Side note: American Culture evolved from Protestant Christian Culture which believes everyone must read the Bible and interpret the word for themselves, and informed by the Enlightenment which applied the scientific method to the hand of God aka. the Universe. It further evolved out of the Anglosphere, which has served as the source of the earliest 1st World cultures and their spread.
Michael Kearins
March 15, 2023 at 5:17 pm
There are many leftists authors on this website. They act like they know about war and the military but they sod not. This author blames Trump for something he supposedly did but if it was so bad then why didn’t biden fix it in the last 2 years? Also look at all of the execs on the bank’s board none of them are qualified there politicized leftists with no banking experience except for one. They spent over 73 mill of this banks money on “woke causes” and were obviously not doing their job and not capable to do their job.
TheDon
March 16, 2023 at 12:54 pm
Of course he did.
He colluded with Russians, cheated on taxes, started a riot, created a pandemic, tried to overthrow the government. Oh he must be problem.
Man, a one man wrecking ball.
Grow up. You are so easily brainwashed by demo b.s.
Omega 13
March 22, 2023 at 3:41 pm
Harry, I’m saying this as a friend: Seek help for your TDS.