In the wake of the second-largest banking collapse in United States history, many liberals took to social media to blame former President Donald Trump.
“By the way, Trump has deregulated banks like Silicon Valley Bank, which failed Friday,” Robert Reich, who served as Secretary of Labor under former President Bill Clinton, posted on Twitter on Friday after it was revealed that Silicon Valley Bank had done so had switch off by FDIC regulators to protect customers as the bank faced a liquidity crisis after losing $2 billion.
Reich was supported by fellow liberals on Twitter who tried to blame Trump for signing a bipartisan bill in 2018 rolled back elements by Dodd-Frank.
“It seems likely that this could have been avoided had the Trump administration not made the rollbacks,” tweeted journalist Ed Krassenstein.
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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 journalist David Sirota. “Donald Trump signed the law into law. And now the bank is the second largest bank failure in American history.”
“Donald Trump cut rail regulations and derailed a toxic train,” blogger Jeff Tiedrich posted on Twitter. “Donald Trump cut banking regulation and a big bank failed. If only we could find a common thread connecting these events.”
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“Good time to revisit this from 2018,” attorney Ron Filipkowski tweeted along with an article about the 2018 law.
EJ Antoni, research associate in regional economics 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 had more to do with an “unusual confluence of events.” .
Antoni explained that the bank “dealed almost exclusively with tech firms, which typically rely on continuously rolling up large debts,” meaning the firms “are not paying off their debts, they are simply taking on new debt to pay off the old ones “.
“Second, SVB has put a disproportionate amount of its cash in long-term bonds. It’s not a bad strategy normally, but it’s unwise when interest rates are zero because eventually those rates have to go up,” Antoni said. “When interest rates rise, bond prices fall. That’s because an investor given the choice of buying an existing bond at a low interest rate or a new bond at a high interest rate will choose the new bond because it offers a better yield. If you want to sell the old bond with its lower interest rate, you have to be willing to sell it at a discount or nobody will buy it.”
Antoni explained that SVB’s undiversified clientele meant that “too many depositors needed cash at once”, forcing the liquidation of bonds that had fallen in value and a “death spiral” quickly ensued.
“SVB had to sell its bonds at a loss to raise money,” Antoni said. “Restricted transactions like this would not have been catastrophic, but occur regularly on a small scale in the financial sector.”
“SVB was a case of mismanagement made possible by the Federal Reserve’s unrealistically low interest rates,” Antoni told FOX Business.
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Criticism of Trump drew strong criticism 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 more than two years,” Greenwald said. “His appointees control all regulators. Until two months ago, Democrats controlled both houses of Congress.
“So whose fault is this week’s Silicon Valley bank collapse? Obviously: Trumps (probably Putins too).”
Trump campaign spokesman Steven Cheung dismissed the idea that Trump was responsible for the bank’s collapse in a statement to Fox Business.
“Runaway Democrats and the Biden administration have continued pathetically to blame President Trump for their failures with desperate lies such as the CCP’s spy balloons, the East Palestine train derailment and now the collapse of SVB,” Cheung said.
“This is nothing more than a sad attempt to gaslight the public to avoid responsibility. The fact is, Biden has run a disastrous economy that has devastated the daily lives of Americans and caused misery across the country because of his anti-American policies.”