In the U.S. politics ahead of next year’s presidential election, a ‘blame battle’ is unfolding over the bankruptcy of Silicon Valley Bank (SVB), the main bank for US tech companies, and Signature Bank, a virtual currency bank. When the Republican presidential candidates increased their offensive, saying, “It is to blame for the Biden government’s policies,” President Joe Biden is fighting back, saying, “It is because of easing regulations on regional banks during the Trump administration, his predecessor.”
Before the stock market opened on the morning of the 13th (local time), President Biden hurriedly briefed the public on the measures announced earlier by the Treasury Department and others through a speech at the White House, and announced that he would fully guarantee the deposits of the bankrupt SVB bank. He said, “I will ask Congress and financial authorities to strengthen banking regulations to reduce the possibility of a repeat of bank failures.”
Opposition Republican presidential candidates started to ‘beat’ President Biden, who urgently went out to turn off the lights. Inflation caused by the Biden government’s large-scale fiscal spending accelerated interest rate hikes, and as a result, the price of government bonds plummeted, resulting in financial difficulties for banks.
Former President Donald Trump said on Social Truth, his social media platform, that day, “We will face a Great Depression that is bigger and stronger than 1929. The proof is that banks are already collapsing.” Then, referring to former President Herbert Hoover, who was president during the Great Depression in the late 1920s, he criticized, “With the largest and most stupid mark in American history, Joe Biden will be the Herbert Hoover of our time.”
Florida Governor Ron Disantis, who is considered a leading Republican presidential candidate, also joined the party. He said, “(The Biden government) paid attention to DEI (diversity, equity, and equality) and ESG (environmental, social, and governance) issues, but did not focus on its core mission.” There is no time for them to do their part to prevent this from happening.” Former U.S. Ambassador to the United Nations Nikki Haley, who announced her presidential run last month, described the decision to fully guarantee SVB customer deposits as a de facto ‘bailout’. Taxpayers should not be held accountable.”
The successive bankruptcies of small and medium-sized U.S. banks, including SVB, were reported by Bloomberg News and others as the main cause of financial deregulation under the Trump administration. The United States enacted the Dodd-Frank Act in 2010, two years after the 2008 financial crisis, to strengthen financial regulation.
However, the law was amended in 2018 during the Trump administration, raising the bank soundness standard from $50 billion (about 65 trillion won) to $250 billion (about 325 trillion won). As a result, mid-sized banks can receive financial soundness assessments every other year or be exempted from the annual financial soundness evaluation. The collapsed SVB (assets of $209 billion, about 271 trillion won) and Signature Bank (asset of $110.4 billion, about 143 trillion won) also fall under this category.
The ruling Democratic Party criticized in unison that the deregulation of regional banks during former President Trump’s administration was the trigger for this bankruptcy. President Biden mentioned the Dodd-Frank Act in his speech that day and said, “This kind of madness came about as the Trump administration loosened the financial regulations introduced by the Obama administration.”
Senator Elizabeth Warren (Massachusetts) of the Democratic Party said on Twitter, “We need to reverse the dangerous deregulation of the Trump era that removed financial restrictions established by the Dot-Frank Act.” Senator Bernie Sanders (Vermont) also said in a statement the day before, “The failure of the SVB is a result of the bank deregulation bill signed by Trump, and I strongly oppose it.”
Regarding this, former President Trump spokesman Stephen Chung refuted in an interview with Business Insider, saying, “It is nothing more than a sad attempt to ‘gaslight’ the public in order to avoid responsibility.”
Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.