Shortly after the second-largest bank collapse in United States history, many liberals took to social media to place the blame on former President Donald Trump.
“By the way, Trump deregulated banks like Silicon Valley Bank, which failed Friday,” Robert Reich, who served as labor secretary under former President Bill Clinton, posted on Twitter Friday after news that Silicon Valley Bank had been shut down by FDIC regulators in an effort to protect customers as the bank faced a liquidity crunch after losing $2 billion.
Reich was joined by other liberals on Twitter attempting to place the blame on Trump for signing a bipartisan bill in 2018 that rolled back elements of Dodd-Frank.
“It seems likely that this could have been avoided if it weren’t for the roll-backs by the Trump administration,” journalist Ed Krassenstein 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,” journalist David Sirota tweeted. “Donald Trump signed the bill into law. And now the bank is the 2nd biggest bank collapse in American history.”
“Donald Trump slashed rail regulations and a toxic train derailed,” blogger Jeff Tiedrich posted on Twitter. “Donald Trump slashed banking regulations and a major bank failed. if only we could find some common thread linking these events.”
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“Good time to reup this from 2018,” attorney Ron Filipkowski tweeted along with an article about the 2018 bill.
EJ Antoni, research fellow in regional economics with 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 tech firms which usually rely on continuously rolling over large debts” which means that the firms are “not paying off their debt but simply taking out new debt to pay off the old.”
“Second, SVB put a disproportionate amount of its cash into long-term bonds. Ordinarily, that’s not a bad strategy, but it’s unwise when interest rates are zero because those rates must rise eventually,” Antoni said. “When rates rise, bond prices fall. This is because an investor with the choice to buy an existing bond at a low rate or a new bond at a high rate will choose the new bond since it’s a better return on investment. If you want to sell the old bond with its lower interest rate, you must be willing to sell it at a discount; otherwise, no one will buy it.”
Antoni explained that SVB’s undiversified clientele meant “too many depositors needed cash all at once” forcing the liquidation of bonds that had lost value and a “death spiral” quickly ensued.
“SVB had to sell its bonds at a loss to raise cash,” Antoni said. “Limited transactions like this would not have been catastrophic, and in fact happen regularly in the financial sector on a small scale.”
“SVB was a case of mismanagement that was made possible by the unrealistically low rates from the Federal Reserve,” Antoni told FOX Business.
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The criticisms of Trump drew a strong pushback 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 2 years,” Greenwald said. “His appointees control all regulatory agencies. Until 2 months ago, Democrats controlled both houses of Congress.
“So whose fault is this week’s collapse of the Silicon Valley Bank? Obviously: Trump’s (probably Putin’s, too).”
Trump campaign spokesperson Steven Cheung dismissed the idea that Trump is to blame for the bank 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, such as the CCP spy balloons, the train derailment in East Palestine, and now the collapse of SVB,” Cheung said.
“This is nothing more than a sad attempt to gaslight the public to evade responsibility. The fact is that Biden has presided over a catastrophic economy that has devastated everyday Americans and has caused misery across the country due to his anti-America policies.”