Silicon Valley Bank's political blame game
Republicans and Democrats alike have wasted no time turning the collapse of Silicon Valley Bank into a political football, seizing on the themes already animating each party's economic message heading into 2024.
Why it matters: The 2008 financial crisis — and the bailouts for big banks that followed — spawned significant populist movements on both the right and left, with legacies still felt in today's politics.
- The fallout from SVB's failure appears to be limited, but neither party can risk underestimating the scale of a potential "bailout" backlash.
- "This is not 2008," White House press secretary Karine Jean-Pierre stressed at a briefing. "This is not a bailout."
Driving the news: President Biden and many congressional Democrats have their eyes fixed on one juicy culprit — former President Trump and his 2018 rollback of parts of the Dodd-Frank Act, which provided regulatory relief for midsized banks such as SVB.
- In an address Monday morning in which he told Americans that their deposits are safe, Biden called on Congress to strengthen bank rules and blamed Trump's deregulation — much as he did after last month's train derailment in East Palestine, Ohio.
- "Let’s be clear. The failure of Silicon Valley Bank is a direct result of an absurd 2018 bank deregulation bill signed by Donald Trump that I strongly opposed," Sen. Bernie Sanders (I-Vt.) said in a statement.
- Sen. Elizabeth Warren (D-Mass.), one of the key architects of post-2008 reforms, called specifically for the 2018 law to be repealed in an interview with Politico.
Reality check: While progressives like Warren and Sanders may feel vindicated, 17 of their Senate Democratic colleagues voted with Republicans to pass Trump's deregulation in 2018.
The other side: Republicans have been less unified in their messaging, waiting to see how the Biden administration would handle the SVB collapse this weekend before executing an attack plan.
- House Oversight Chair James Comer (R-Ky.) and Florida Gov. Ron DeSantis called SVB a "woke" bank, suggesting it was distracted by diversity, equity and inclusion initiatives.
- GOP presidential candidate Nikki Haley accused Biden of "pretending this isn't a bailout," claiming that taxpayers would foot the bill when the FDIC's backstop fund runs out.
- Trump said Biden would go down as "the Herbert Hoover of the [modern] age" and predicted a bigger economic collapse than the Great Depression.
Reality check: There is no evidence that DEI policies played any role in SVB's failure, or that a second Depression is on the horizon. And the Deposit Insurance Fund relies on fees that banks pay — not taxpayer money — to establish exactly this type of fail-safe.
What's next: House Republicans will hold a private conference call Monday night to discuss how the GOP should respond to the collapse of SVB, a senior GOP aide told Axios.