OPINION:
In an uncharacteristic move, President Biden woke up early Monday to address the nation about the collapse of Silicon Valley Bank.
“Today, thanks to the quick action of my administration over the past few days, Americans can have confidence that the banking system is safe,” Mr. Biden assured the U.S. public. “Small businesses across the country that had deposit accounts at these banks can breathe easier knowing they’ll be able to pay their workers and pay their bills. And their hardworking employees can breathe easier as well.”
Let’s be clear: Silicon Valley Bank, or SVB, was not catering to the little guy whose deposits are insured by the Federal Deposit Insurance Corp. up to $250,000 individually. Only 11% of SVB’s accounts were for this amount or less; the other 89% either were larger or the sorts of accounts that are categorically ineligible for FDIC coverage.
Over half of Silicon Valley startups bank with SVB — they are not personal accounts but businesses with millions of dollars. As Bloomberg reported on Friday, SVB is the “go-to financial institution for startups. Today it’s a household name in the Bay Area, deeply enmeshed in tech companies’ networks and infrastructure. SVB isn’t just a bank — it makes equity investments, patronizes startups’ services and sponsors lavish industry parties.”
Its account holders don’t reside in East Palestine, Ohio, who continue to suffer from a toxic train derailment largely ignored by the Biden administration. These account holders are Mr. Biden’s donors, and the people affected by the derailment are not.
A GovPredict analysis of Federal Election Commission data revealed people living in counties considered in Silicon Valley gave nearly $200 million to Democrats in 2020. An analysis by the Center for Responsive Politics found that 98% of political contributions from people who worked at internet companies went to Democrats that year.
Not surprisingly, these donors wanted quick action by the Biden administration to save their investments. The New York Post reported the day before Mr. Biden announced the bailout that Democrat-donor investors were “furious” at his slow response toward SVB.
“Some Dem tech investors who have spent millions of dollars currying favor with the Biden administration are furious about what they call the White House’s utter lack of help over the collapse of Silicon Valley Bank,” the Post said. “One of the deep-pocketed venture capitalists told the Post that Treasury Secretary Janet Yellen’s statement Sunday throwing cold water on the possibility of a bailout was ‘pathetic.’”
Less than 12 hours later — after many venture capitalists stoked online panic there could be a widespread bank run on Monday — they got what they wanted: a bailout from the federal government to compensate for their own poor fiscal management.
SVB was, for all intents and purposes, an isolated case. It lobbied for looser regulations, arguing it was not a “systemic risk” to the banking system if it collapsed. Meanwhile, it took on risky investments, plowing a whopping 57% of its total assets into its investment portfolio, more than twice its peer average, which cut into its liquidity. It also bought mortgage-backed securities, ignoring the risk of rising interest rates. It didn’t have an official chief risk officer for eight months in 2022.
It did, however, find time to publicly commit $5 billion in “sustainable finance and carbon neutral operations to support a healthier plant.” According to its 2022 ESG report, it had an all-important diversity, equity and inclusion governance group, a “green team” that focused on “internal sustainability interests and activities,” and a “climate risk group.”
Nearly two weeks before SVB’s collapse, CEO Greg Becker cashed out $3.6 million in the bank’s stock and paid lavish bonuses to its top staff. Now, he’s off the hook for the bank’s demise, with the federal government backstopping his customers’ deposits.
It was Mr. Biden’s big spending that fueled inflation early in his administration, inflation that forced the Federal Reserve to start raising interest rates.
High interest rates, combined with venture capitalists and their greed machine, contributed to SVB’s collapse. Now, Mr. Biden is protecting the banking sector from the damage of higher interest rates. But what about the rest of America? The average U.S. consumer continues to pay 40-year highs on everything from gasoline to groceries.
Now, they’re going to be saddled with higher banking fees — thanks to Mr. Biden’s Silicon Valley bailout.
Mr. Biden insists that none of SVB’s losses will be “borne by the taxpayers.” The money will instead come from fees banks pay into the Deposit Insurance Fund — higher fees that the banks will surely pass on to customers.
If only SVB were based in East Palestine, Ohio. Maybe then Middle America, and its suffering, could get the president’s attention.
• Kelly Sadler is the commentary editor at The Washington Times.
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