I’m sure the Biden White House was looking forward to moving on from the toxic train crash in East Palestine, Ohio, but then the banking system came under threat. Silicon Valley Bank collapsed, and the second-largest bank closure in American history landed at the feet of Joe Biden. The banking system was downgraded yesterday, but Biden is offering a soft bailout, ensuring all depositors who doled out more than $250,000 will be covered by the Federal Deposit Insurance Corporation’s Insurance Fund. No doubt it will stabilize things, though the Biden administration rushing to the aid of the wealthy while giving the finger to East Palestine is beyond unseemly.
Now, the blame game begins because SVB wasn’t the only bank to shutter; Signature Bank soon followed. Signature was more of a cryptocurrency operation, but it’s notable since former Rep. Barney Frank (D-MA), whose namesake bill post-2008 was supposed to prevent such bank failures, is sort of what caused this week’s calamity. But Frank is adamant, and probably right, that the slight administrative tweaks to Dodd-Frank weren’t the source of the bank closures. Sen. Elizabeth Warren (D-MA) wants to blame Trump (via Politico):
From his front-row seat, he [Frank] blames Signature’s failure on a panic that began with last year’s cryptocurrency collapse — his bank was one of few that served the industry — compounded by a run triggered by the failure of tech-focused Silicon Valley Bank late last week. Frank disputes that a bipartisan regulatory rollback signed into law by former President Donald Trump in 2018 had anything to do with it, even if it was driven by a desire to ease regulation of mid-size and regional banks like his own.
“I don’t think that had any impact,” Frank said in an interview. “They hadn’t stopped examining banks.”
But Warren, a fellow Massachusetts Democrat who designed landmark consumer safeguards that ended up in Frank’s 2010 banking law, is placing the blame firmly on the Trump-era changes that relaxed oversight of some banks and says Signature is a prime example of the fallout.
“Had Congress and the Federal Reserve not rolled back the stricter oversight, SVB and Signature would have been subject to stronger liquidity and capital requirements to withstand financial shocks,” Warren wrote Monday in a New York Times op-ed.
And as Fox News’ Steve Hilton pointed out why Warren’s line falls flat: Silicon Valley Bank was regulated by California officials, picked by Democratic Gov. Gavin Newsom.
Silicon Valley Bank wasn't regulated by "Washington."— steve hilton (@SteveHiltonx) March 14, 2023
It was regulated by California's Department of Financial Protection and Innovation, entirely created and controlled by Gavin Newsom and his Democrat appointees. https://t.co/ePlTfRYCTH