President Joe Biden blamed former President Donald Trump for the collapse of Silicon Valley Bank (SVB) and Signature Bank, attributing their demise to Trump’s rollback of some Obama-era policies.
“During the Obama-Biden administration, we put in place tough requirements on banks like Silicon Valley Bank and Signature Bank, including the Dodd-Frank law to make sure that the crisis we saw in 2008 would not happen again,” Biden said during his Monday remarks.
“Unfortunately, the last administration rolled back some of these requirements,” he added.
The bill exempting many banks from the Dodd-Frank Wall Street reform law — called the Economic Growth, Regulatory Relief and Consumer Protection Act — passed the Senate in a bipartisan way in 2018. Lawmakers had cited concerns about small banks and credit unions, The Hill reported.
Trump then signed the bill into law after it passed the House.
Trump’s team denied that the former president’s actions contributed to the banks’ collapse.
“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,” Trump’s spokesperson Steven Cheung told the Daily Caller in a statement.
“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,” Cheung added.
SVB collapsed Friday after a bank run on its deposits, marking the second-largest bank collapse in U.S. history. The bank had announced a $1.8 billion loss on asset sales due to rising interest rates Wednesday, and venture capital funds encouraged companies to withdraw their deposits while the bank’s stock tanked. (RELATED: Regulators Shut Down Silicon Valley Bank After Stock Collapses)
Federal regulators announced Sunday the New York-based Signature Bank was shut down to protect consumers after the collapse of SVB.
EJ Antoni, research fellow in regional economics at the Heritage Foundation, told the Caller “it’s unlikely that the Dodd-Frank changes would have prevented SVB’s collapse” because “the regulation dealt not with individual bank solvency but with systemic risk.”
“Stress testing by the Federal Reserve does not focus on a bank’s health, but the bank’s interconnectedness to the entire financial system. The collapse of SVB was not, and is not, a systemic risk issue,” Antoni said.
“Those claiming the bipartisan deregulation in 2018 was responsible for today’s collapse don’t understand stress testing nor fractional reserve banking. SVB collapsed because of the unrealistically low interest rates imposed by the Fed and gross fiscal mismanagement at the bank. For example, management sold off the bank’s interest rate hedges in December 2021 – assets which would have offset the bank’s losses today,” Antoni added.
Biden said he would “ask Congress and the banking regulators to strengthen the rules for banks to make it less likely this kind of bank failure would happen again.”
He also promised that taxpayers would not be made to bail out the banks, and that the banking system is “safe.”
Biden has yet to identify anyone responsible, but said the “management of these banks will be fired” as his administration conducts an investigation.