Yale professor Howard Forman compiled a list of Senators who voted to REDUCE the regulatory monitoring of Silicon Valley Bank (SVB) in 2018; he then tweeted that President Trump ultimately made the bill law, implying the collapse was his fault.
On Wednesday, there was widespread fear after SVB made an announcement. They said that it had sold a number of securities at a loss and intended to sell $2.25bn in new shares to help right its failing balance sheet.
The enterprises backed by venture capitalists withdrew their funds from SVB after being instructed to do so. The shares of the financial institution subsequently dropped due to the bank run.
Now that federal authorities have stepped in to take control of SVB, political ideologues like Forman have rallied to try to pin the bank’s collapse on someone. Twitter commentators quickly blame President Trump and Republican lawmakers for SVB’s failure.
Forman included Marco Rubio, Lindsey Graham, Rand Paul, and Mark Warner in the tweet’s “cc” list.
“It’s almost like there’s a correlation between deregulating banks and banks taking on untenable amounts of risk,” one Twitter user remarked.
“Experts” who talked with The New York Times agreed that a bank of SVB’s size could have managed its risks better had portions of the Dodd-Frank act not been pushed back under President Trump.
But it was inflation that SVB pointed the finger at, and it was a valid point. The advances in technology stocks that might have benefited the bank were stifled by higher borrowing rates.
But, SVB’s president, Greg Becker, argued to lawmakers eight years ago that the bank should be subject to less regulation due to the “low-risk profile of our operations and business model.” According to Becker, SVB was chosen because of its “excellent risk management techniques” and “deep grasp of the markets it services.”
After three long years (and SVB spending half a million dollars on lobbying), Congress finally granted SVB’s wish.
Be careful what you wish for.