When the next bank loaded with depositors exceeding $250,000 fails, will the federal government jump in to save the day as it is doing now with Silicon Valley Bank?
That is the question the Biden administration hasn’t answered as of Monday afternoon. The response to it might depend on whether or not that bank is deemed “woke” enough.
The president and his team were quick to jump in to rescue customers of SVB, the 16th largest bank that caters to the leftist techno-class in California and around the country. Many of its clients have far more than the quarter million in deposits that would be covered by the Federal Deposit Insurance Corporation.
The bank, however, used that money in arguably risky investments and promoted things such as diversity, equity, inclusion, and climate change hysteria. At the same time, CBS News reported that the sharp raise hikes enacted by the Federal Reserve to curb Bidenflation — in part caused by the president’s gigantic spending in 2021 and 2022 — weakened the bank’s overall investment portfolio. Similarly, the media outlet noted that depositors in the bank had to withdraw more and more cash due to high prices. In short, SVB could no longer meet its obligations.
Some, including the president, blame the failure of de-regulation that occurred in the Trump era. That is true to a certain extent, but it overlooks the fact that Biden’s economy created the perfect storm for this bank to go under, causing a semi-moral hazard.
For many, the optics show that the bank operated with well-placed arrogance that its cronies in government, Democratic officials, would help them out when needed.
Critics, including Senator Josh Hawley (R-MO) and 2024 candidate Vivek Ramaswamy have argued, respectively, that SVB operated as if it were “too woke to fail” and understood its true insurance policy was to “curry favor with the Biden administration” via its aforementioned investments that mirror social justice warrior pet projects.
Now, the U.S. Treasury Department insists that taxpayers will not be on the hook to make SVB clients “whole” and instead money paid by the bank via fees paid by financial intuitions around the country.
Yet, those costs will trickle down to customers across the nation. So indirectly, yes the common man will pay to bail out SVB.
Experts believe that the problems are limited to SVB, as well as Signature Bank, and that most banks won’t need that sort of a bailout — even if SVB never received one.
So why the rush for this one bank?
Well, on Sunday, NBC’s Maria Kumar let it slip that SVB is the “Democrats’ ATM.” Indeed, unsurprisingly, SVB had many depositors who work in Silicon Valley. For context, 95% of Silicon Valley employees at six major tech firms donated to Biden’s 2020 bid. More data shows that tech employees across the board donated to Democrats and the president.
In that case, it is not really surprising to see that Biden would act so swiftly to make sure his donors are taken care of. The action is couched under the shield of “protecting the little guy,” but that’s a load of crock, to put it mildly.
Unfortunately, it appears that Biden is more focused on rewarding his allies who knowingly took book risks by investing with this bank and keeping more than the FDIC insured in one location.
Put another way, if this bank was called “East Palestine Ohio Bank,” does anybody think that the president would have acted with the same urgency? Or, perhaps, the real question is what’s the point of the FDIC insurance limit if it is just going to be adjusted to bail out Democratic friends?
Biden said that his actions will provide a little “breathing room” for Americans and that the economy will be all right. Still, we’ll hold our breath as we await the answers to the questions in this column.
The views expressed in this piece are the author’s own and do not necessarily represent those of The Daily Wire.