HomeUS News updateEven in a financial crisis, culture wars trump economics

Even in a financial crisis, culture wars trump economics

As governments race to prevent the collapse of a Silicon Valley bank, conservatives are seizing on rescues in the form of a “Biden bailout” for a “woke” bank that caters to Democratic donors in “Big Tech.”

While the GOP has traditionally been associated with business, its dominant populist wing is more interested in punishing corporations on the wrong side of the culture wars than in stabilizing industry — at least while the party is out of power and dealing with the consequences. does not take responsibility for.

“Republicans will frame this bankruptcy and subsequent bailout as class warfare. It is East Palestine versus Silicon Valley,” said Sam Geduldig, a Republican lobbyist, referring to the site of a recent train crash in Ohio that Republicans accused the Biden administration of not paying attention.” We can’t get into a situation where there are red banks and blue banks, and unfortunately, that’s where we are.”

Geduldig noted, for example, that Banking Committee Chairman Sen. Sherrod Brown, D-Ohio, faces a tough re-election next year. “Republican campaign workers are going to prosecute exactly the case that Brown has Gave nothing to East Palestine and everything to Silicon Valley Bank.

Bank failures are not particularly uncommon. According to the FDIC, there have been 565 bank failures since 2000, with several typically occurring each year, even in non-recession times.

But given its centrality to the tech sector, the Silicon Valley bank was uniquely positioned to spark a political firestorm.

And the failure simultaneously pushes several political hot buttons: concerns about the power of Big Tech from both sides of the aisle; populist anger over the bailout; battles over corporate cultures prioritizing issues such as diversity and the environment; and traditional economic concerns about regulation, government intervention, spending, and inflation.

It is the biggest bank failure since the 2008 financial crisis, when government bailouts sparked a right-wing Tea Party insurgency — history President Joe Biden is trying to avoid repeating this time, saying taxpayer dollars will not be used and insisted that those responsible would be held accountable.

But Republican presidential candidate Nikki Haley still called it a “Biden bailout,” warning that a pot of money paid out by banks could cover the costs for now, in case it dries up. Taxpayers will be on the hook. “Joe Biden is pretending it’s not a bailout. It is,” she said.

Others argued that the failure was the result of “reckless spending by President Biden and Congressional Democrats,” as did Alfredo Ortiz, CEO of the Job Creators Network, a conservative business group that, he said, drove inflation, prompting the Federal Reserve to Forced raise rates, which devalues ​​the old US Treasury bonds held by the bank.”

Nevertheless, the most vocal early reaction to the bank failure on the right was related more to bank culture than balance sheets.

“They’re very concerned with DEI and politics and all kinds of things. I think that’s really taken them out of focus on their core mission,” Florida Republican Gov. Ron DeSantis, a potential presidential candidate, said on Fox News Sunday, referring to corporate diversity, equity and inclusion programs that have become a boogeyman on the right, along with environmental, social and governance (ESG) investments.

DeSantis introduced the legislation last month, which he called “waking up the ESG financial scam.”

The chief risk officer of a Silicon Valley bank drew particular attention from conservatives because she was involved in an LGBTQ employee group. “SVB is what happens when you advance a leftist/woke ideology and set precedent over common sense business practices,” Tweeted On a screen grab of the headshot of a Donald Trump Jr. staffer.

“These banks are going badly because everyone is focusing on diversity and all the issues,” Home Depot co-founder Bernie Marcus, an activist Republican donor, said on Fox News.

Missouri Republican Sen. Josh Hawley said he plans to introduce legislation to prevent consumers from paying any fees that may be raised to “pay for” at other banks.woke up,

Fox News host Tucker Carlson suggested on Friday that the bank was focusing on “leading glass-ceiling-shattering women” and “screaming about racial equity.”

Not one member of Silicon Valley Bank’s 12-person board was white. Less than half were women.

“The WOKE agenda coming from SVB is largely responsible for their failure. How much money did they waste on funding ESG/CRT CRAP? Crazy leftist agenda is ruining our future. Wake up, break down! Tweeted Representative Ronnie Jackson, R-Texas.

Stephen Miller, top policy advisor to former President Donald Trump, Called on House Republicans to investigate how much money the company spent on diversity initiatives, “climate scandals” and allegedly helping Democrats.

House Oversight Chair Rep. James Comer, R-Ky., was already thinking about a similar investigation on Sunday, calling the bank “one of the most aware banks out there” on Fox News.

A Wall Street Journal op-ed criticized the bank for losing sight of its board’s diversity (one black person, one LGBT person and two veterans), concluding, “I’m not saying that 12 white people can get away with this mess.” Will survive, but may be distracted by company diversity demands.

There is little evidence to support the idea that Silicon Valley Bank spent excessively on diversity or environmental policies.

Regulators said the decline was about mismanagement of bond risk, as low-interest US Treasury bonds were bought before the Federal Reserve tried to fight inflation.

Most major banks have diversity, equity and inclusion programs for employees and customers for financial products that consider environmental, social and governance issues, including, for example, mutual funds that invest in fossil fuel or tobacco companies. do not invest.

Last fall, a new “anti-voke” bank shut down after rapidly burning through $50 million in capital from prominent investors such as conservative billionaire Peter Thill. The startup was clearly billed as an alternative to mainstream banks for conservatives, but operated for less than three months before shuttering.

Executives, economists, and even libertarian-leaning tech leaders say that depositors at the Silicon Valley bank need to be made whole, because it’s not their fault the bank busted — its executives and shareholders were wiped out. There is hope – and because if depositors lose their money, it could trigger a runaway chain reaction that could result in job losses, defaults, more bank failures and even a recession.

“It was an urgent need to protect the runs against the many, many banks across the country, and to restore confidence to make sure that people could get their payroll checks,” said former Treasury Secretary Larry Summers, a Silicon Valley business. I can continue working.” MSNBC said Monday, which has been skeptical of financial regulation and has at times clashed with fellow Democrats.

Some experts say that Silicon Valley Bank and other regional banks successfully lobbied Congress to seek exemption from regulation in the Dodd-Frank Wall Street reform act, which may fail. Those exemptions were supported by Republicans in Congress, along with some Democrats, and were signed into law by Trump in 2018.

Talk of more regulation worries Sen. Kevin Cramer, RND, however, who called the government’s rescue measures “too many, too fast.” He argued that Biden set a dangerous precedent by freezing 100% of unsecured deposits, “sending a signal to all banks that bad behavior will be rewarded.”

Cramer, a member of the Senate Banking Committee, said in an interview, “The collapse is clearly a liquidity crisis, not a capital crisis, and it should have been identified before panic occurred.” “Now [Biden] It is likely that this failure will be used to increase regulations on smaller banks which will only encourage further consolidation.”

But in the same breath, Cramer also knocked on what he said were regulators’ focus on ESG efforts.

The episode “should be a wake-up call to regulators to focus on the core mission for financial institutions, and that’s not climate change or managing diversity,” the senator said. “It’s risk based on financial return.”



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