Over the weekend, the three Republican candidates for the 2024 presidential election expressed their opinions on the unexpected failure of Silicon Valley Bank (SVB). The campaign of former President Trump attributed the collapse to the Biden administration's policies that are deemed detrimental to the country. In contrast, former Ambassador Nikki Haley and entrepreneur Vivek Ramaswamy criticized the possibility of a taxpayer bailout.
Possible Chain Reaction
Following its collapse last week, Silicon Valley Bank (SVB), which had ranked as the 16th-largest bank in the United States, is now under federal regulators' control. While the Federal Deposit Insurance Corporation (FDIC) guarantees deposits up to $250,000, some investors are advocating for a government bailout to safeguard depositors.
There are concerns that a possible run of withdrawals may trigger a chain reaction. Some on the liberal side have held Trump accountable for signing a bipartisan bill in 2018 that loosened regulations under Dodd-Frank. However, Trump's campaign refuted these claims.
Steven Cheung, a spokesperson for former President Trump's campaign, recently expressed disapproval of the Democratic Party's attempt to hold Trump accountable for a series of recent events, including the collapse of Silicon Valley Bank (SVB). He accused the Democrats of gaslighting the public and trying to avoid taking responsibility for their failures. Cheung attributed the economic crisis to Biden's anti-American policies, which have caused significant harm to American citizens.
No Corporate Bailouts
Meanwhile, former US ambassador to the United Nations, Nikki Haley, voiced her opinion against a corporate bailout for SVB, stating that taxpayers should not be responsible for it. Instead, she suggested that private investors should acquire the bank and its assets. Entrepreneur Vivek Ramaswamy, who founded Roivant Sciences and Strive Asset Management, agreed with Haley's sentiment.
He called for SVB to be allowed to fully fail and proposed that the FDIC should increase its guarantee level to prevent a bank run on Monday. Ramaswamy also criticized SVB for its failure to account for interest rate risks, both in terms of client concentration risk amongst startups and investing in interest rate-sensitive securities.
Treasury Secretary Janet Yellen has clarified that the federal government will not provide a bailout for SVB, but will instead seek to address the needs of depositors affected by the bank's collapse. Yellen made it clear that the government would not repeat the bailouts of the past, and that its primary concern is to address the depositors' situation.
“We’re not going to do that again,” she said, “But we are concerned about depositors, and we’re focused on trying to meet their needs.”
She stated that she has been working closely with banking regulators over the weekend to develop appropriate policies to address the situation. Although she was unable to provide further details at this time, Yellen emphasized that the American banking system is well-capitalized, safe, and resilient.
This article was produced and syndicated by Wealth of Geeks.