Blog: Critics Point Fingers at Trump for Silicon Valley Bank’s Collapse … – NewsBreak Original

Silicon Valley Bank, the leading lender to tech firms and startups, collapsed on Friday, leaving critics to point fingers at the Trump administration and Republican senators. Though relatively unknown outside of Silicon Valley, the bank’s failure has caused panic among investors and raised questions about the role of government regulation in the banking industry.

The collapse was preceded by an announcement from the bank that it had sold a number of securities at a loss and planned to sell $2.25bn in new shares to improve its balance sheet. This news prompted VC firms to advise their companies to withdraw their holdings from the bank, which caused a run on the bank and led to its ultimate collapse. Federal regulators stepped in to take control of the bank after its failure.

Critics have focused on a list of Republican senators who voted to reduce regulatory oversight on Silicon Valley Bank in 2018. Howard Forman, a professor at Yale, shared the list which includes names like Senators Marco Rubio, Lindsey Graham, Rand Paul, and Mitch McConnell, as well as a few Democrats, including Senators Joe Manchin and Tim Kaine. David Sirota, founder of The Lever, specified that “50 Republican senators and 17 Democratic senators voted to ignore warnings and weaken risk regulations for Silicon Valley Bank. Donald Trump signed the bill into law. And now the bank is the 2nd biggest bank collapse in American history.”

While external factors, such as inflation and a drop in available VC funding, contributed to the collapse of the bank, some banking experts argue that the bank might have managed its interest rate risk better if parts of the Dodd-Frank financial-regulators package had not been rolled back under President Trump. The Dodd-Frank Act was introduced by the Obama administration in response to the Great Recession, which was sparked by the banking collapse of 2007 onwards. The Act introduced new financial regulations, including a reduction in the frequency of stress tests conducted by the Federal Reserve for banks whose assets totaled between $100bn and $250bn.

At the time of this story, Mr. Trump had not commented on the bank’s collapse. His Truth Social feed includes an insistence that he should not face prosecution in New York, denials that he had an affair with Stormy Daniels, and many posts bragging about how his Capitol riot inmate choir is beating Miley Cyrus on iTunes.

Sources and related news:

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s