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Political blame sport erupts over SVB failure

Silicon Valley Bank’s political blame gameSen. Elizabeth Warren (D-Mass.). Photo: Al Drago/Bloomberg via Getty ImagesRepublicans 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

Political blame sport erupts over SVB failure

Silicon Valley Financial institution’s political blame sport

Zachary Basu

Elizabeth Warren

Sen. Elizabeth Warren (D-Mass.). Photograph: Al Drago/Bloomberg by way of Getty Pictures

Republicans and Democrats alike have wasted no time turning the collapse of Silicon Valley Bank right into a political soccer, seizing on the themes already animating every celebration’s financial message heading into 2024.

Why it issues: The 2008 monetary disaster — and the bailouts for large banks that adopted — spawned vital populist actions on each the proper and left, with legacies nonetheless felt in at the moment’s politics.

  • The fallout from SVB’s failure seems to be restricted, however neither celebration can danger underestimating the dimensions of a potential “bailout” backlash.
  • “This isn’t 2008,” White Home press secretary Karine Jean-Pierre pressured at a briefing. “This isn’t a bailout.”

Driving the information: President Biden and lots of congressional Democrats have their eyes fixed on one juicy culprit — former President Trump and his 2018 rollback of elements of the Dodd-Frank Act, which supplied regulatory reduction for midsized banks comparable to SVB.

  • In an address Monday morning through which he informed Individuals that their deposits are protected, Biden referred to as on Congress to strengthen financial institution guidelines and blamed Trump’s deregulation — a lot as he did after last month’s train derailment in East Palestine, Ohio.
  • “Let’s be clear. The failure of Silicon Valley Financial institution is a direct results of an absurd 2018 financial institution deregulation invoice signed by Donald Trump that I strongly opposed,” Sen. Bernie Sanders (I-Vt.) stated in an announcement.
  • Sen. Elizabeth Warren (D-Mass.), one of many key architects of post-2008 reforms, referred to as particularly for the 2018 regulation to be repealed in an interview with Politico.

Actuality examine: Whereas progressives like Warren and Sanders might really feel vindicated, 17 of their Senate Democratic colleagues voted with Republicans to cross Trump’s deregulation in 2018.

The opposite facet: Republicans have been much less unified of their messaging, ready to see how the Biden administration would deal with the SVB collapse this weekend earlier than executing an assault plan.

  • House Oversight Chair James Comer (R-Ky.) and Florida Gov. Ron DeSantis referred to as SVB a “woke” financial institution, suggesting it was distracted by variety, fairness and inclusion initiatives.
  • GOP presidential candidate Nikki Haley accused Biden of “pretending this is not a bailout,” claiming that taxpayers would foot the invoice when the FDIC’s backstop fund runs out.
  • Trump stated Biden would go down as “the Herbert Hoover of the [modern] age” and predicted a much bigger financial collapse than the Nice Despair.

Actuality examine: There’s no evidence that DEI insurance policies performed any position in SVB’s failure, or {that a} second Despair is on the horizon. And the Deposit Insurance coverage Fund depends on charges that banks pay — not taxpayer money — to determine precisely this kind of fail-safe.

What’s subsequent: Home Republicans will maintain a non-public convention name Monday evening to debate how the GOP ought to reply to the collapse of SVB, a senior GOP aide informed Axios.

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