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Journalist David Sirota took to Twitter to remind people that both Republican and Democratic senators voted to weaken risk regulations for Silicon Valley Bank, and Donald Trump signed the bill into law. As a result, the bank has now become the second-largest bank collapse in US history. Blogger Jeff Tiedrich also tweeted, suggesting that there may be a common thread between Donald Trump slashing rail regulations and a toxic train derailment, as well as his slashing of banking regulations and a major bank failure.
Liberals blame Trump for Silicon Valley Bank collapse citing 2018 bipartisan bill
Following the second-largest bank failure in US history, numerous liberals utilized social media to attribute responsibility to ex-President Donald Trump.
On Friday, following the announcement that Silicon Valley Bank had been closed down by FDIC regulators to protect customers after losing $2 billion, Robert Reich, who previously served as labor secretary under President Bill Clinton, took to Twitter and stated that Trump deregulated banks such as Silicon Valley Bank. He was joined by other liberal Twitter users, including journalist Ed Krassenstein, who suggested that the bank's failure may have been prevented if the Trump administration had not rolled back certain aspects of the Dodd-Frank Act with a bipartisan bill in 2018.
On Saturday, EJ Antoni, a research fellow in regional economics at The Heritage Foundation's Center for Data Analysis, told FOX Business that the collapse of Silicon Valley Bank was not caused by either Trump or Dodd-Frank, but rather by an "unusual confluence of events." Antoni explained that the bank mainly dealt with tech companies that relied on continually rolling over large debts, rather than paying off their debt. Additionally, SVB invested a disproportionate amount of its cash in long-term bonds, which became unwise when interest rates hit zero because bond prices fall when rates rise. Due to SVB's undiversified clientele, when too many depositors needed cash at the same time, a "death spiral" quickly occurred, forcing the liquidation of bonds that had lost value. However, Antoni noted that limited transactions like this are not usually catastrophic, and in fact, happen regularly on a smaller scale in the financial sector.