Trump blamed over Silicon Valley Bank collapse for watering down financial regulations
Critics looking to assign blame for the collapse of Silicon Valley Bank have found possible culprits in Donald Trump and Republican senators.
Though little known outside of Silicon Valley, the SVB was the leading lender to tech firms and startups before it crumbled on Friday.
SVB announced on Wednesday that it had sold a number of securities at a loss, and that it planned to sell $2.25bn in new shares to help right its balance sheet.
The announcement set off a wave of panic as VC firms advised their companies to pull their money from the bank. This spiralled into a bank run, leaving the institution's stock to plummet. The federal regulators moved in to take control of the company after its failure.
Howard Forman, a professor at Yale, shared a list of Republican senators who voted to reduce regulatory oversight on SVB in 2018. That legislation was then signed into law by Mr Trump.
The list includes names like Senators Marco Rubio, Lindsey Graham, Rand Paul, and Mitch McConnell, as well as a few Democrats, including Senators Joe Manchin and Tim Kaine.
David Sirota, the founder of The Lever, got specific with the number of senators who voted to deregulate the bank.
Here is the list of Senators who voted to REDUCE the regulatory oversight of Silicon Valley Bank (SVB) in 2018, signed into law by then President Trump. Maybe ask them why they did this?
cc: @marcorubio @LindseyGrahamSC @RandPaul @MarkWarner pic.twitter.com/MNerJbgPxc
— (((Howard Forman))) (@thehowie) March 11, 2023
50 Republican senators and 17 Democratic senators voted to ignore warnings and weaken risk regulations for Silicon Valley Bank.
Donald Trump signed the bill into law.
And now the bank is the 2nd biggest bank collapse in American history. https://t.co/a8XEifQidA
— David Sirota (@davidsirota) March 11, 2023
"50 Republican senators and 17 Democratic senators voted to ignore warnings and weaken risk regulations for Silicon Valley Bank," he wrote. "Donald Trump signed the bill into law. And now the bank is the 2nd biggest bank collapse in American history."
The SVB struggled to weather the Federal Reserve's efforts to stymie inflation; higher borrowing costs throttled the gains of tech stocks that could have benefitted the bank, and a significant drop in available VC funding floating around forced companies to withdraw their holdings.
While external factors, like inflation, certainly added to its collapse, some banking experts speaking to the New York Times have argued that a bank the size of SVB "might have managed its interest rate risk better had parts of the Dodd-Frank financial-regulators package not been rolled back under President Trump”.
The Obama-era Dodd-Frank Act introduced new financial regulations in the aftermath of the Great Recession which was sparked by the banking collapse of 2007 onwards. Among other measures, the regulations reduced the frequency of Federal Reserve-conducted stress tests for banks whose assets totally between $100bn and $250bn.
At the time of this story Mr Trump had not commented on the bank's collapse. His Truth Social feed includes an insistence that he should not face prosecution in New York, denials that he had an affair with Stormy Daniels, and many posts bragging about how his Capitol riot inmate choir is beating Miley Cyrus on iTunes.