Shortly after the second largest bank failure in United States history, many liberals took to social media to blame former President Donald Trump.
“By the way, Trump bailed out banks like Silicon Valley Bank, which failed on Friday,” tweeted Robert Reich, who served as Labor secretary under former President Bill Clinton, on Friday after news that Silicon Valley Bank had collapsed. shut down by FDIC regulators in an effort to protect customers as the bank faced a liquidity crisis after losing $2 billion.
Reich joined other liberals on Twitter in trying to blame Trump for signing a bipartisan bill in 2018 that wrapped items of Dodd-Frank.
“It seems likely that this could have been avoided had it not been for the reversals by the Trump administration,” journalist Ed Krasenstein tweeted.
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“Quick reminder: 50 Republican senators and 17 Democratic senators voted to ignore warnings and weaken risk regulations for Silicon Valley Bank,” tweeted reporter David Sirota. “Donald Trump signed the bill into law. And now the bank is the 2nd largest bank failure in American history.”
“Donald Trump cut rail regulations and a toxic train derailed,” tweeted blogger Jeff Tidrich. “Donald Trump reduced banking regulations and a major bank failed. If only we could find some common thread that connects these events.”
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“Good time to redo this from 2018,” attorney Ron Filipkowski tweeted along with an article about the 2018 bill.
EJ Antoni, regional economics researcher at the Heritage Foundation’s Center for Data Analysis, told FOX Business on Saturday that the collapse had “nothing to do with Trump or Dodd-Frank” and more to do with an “unusual confluence of events.”
Antoni explained that the bank “dealt almost exclusively with technology companies that usually rely on the continuous recycling of large debt”, meaning that the companies “don’t pay off their debt but just take out new debt to pay off the old”.
“Second, SVB put a disproportionate amount of its cash into long-term bonds. Normally, that’s not a bad strategy, but it’s unwise when interest rates are zero, because those rates have to rise eventually,” Antoni said. “When interest rates rise, bond prices fall. This is because an investor given the choice of buying an existing bond with a low interest rate or a new bond with a high interest rate will choose the new bond as it is a better return on investment. If you want to sell the old bond at the lowest rate, you have to be willing to sell it at a discount; otherwise, nobody will buy it.”
Antoni explained that SVB’s undiversified clientele meant that “too many depositors needed cash at the same time” forcing the liquidation of bonds that had lost value and a “death spiral” quickly followed.
“SVB had to sell its bonds at a loss to raise cash,” Antoni said. “Limited transactions like this would not be catastrophic and in fact happen regularly in the financial sector on a small scale.”
“SVB was a case of mismanagement made possible by unrealistically low interest rates from the Federal Reserve,” Antoni told FOX Business.
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Trump’s criticisms drew strong reactions on Twitter, including from journalist Glenn Greenwald, who pointed out that President Biden has been in office for two years.
“Biden has been president for over 2 years,” Greenwald said. “His appointees control all regulatory agencies. Until 2 months ago, Democrats controlled both houses of Congress.
“So who’s to blame for this week’s Silicon Valley bank collapse? Obviously: Trump (and probably Putin).”
Trump campaign spokesman Steven Chung dismissed the idea that Trump was to blame for the bank’s collapse in a statement to Fox Business.
“Out of control, Democrats and the Biden administration have continued to pathetically try to blame President Trump for their failures with desperate lies like the KKK spy balloons, the East Palestine train derailment and now the SVB collapse,” said Cheung.
“This is nothing more than a sad attempt to hype the public to avoid responsibility. The fact is that Biden has presided over a disastrous economy that has devastated everyday Americans and caused misery across the country because of his anti-American policies. .”