Political blame sport erupts over SVB failure

Silicon Valley Financial institution’s political blame sport

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(D-Mass.), one of many key architects of post-2008 reforms, referred to as particularly for the 2018 regulation to be repealed in an interview with Politico.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.