Former President Donald Trump and other 2024 Republican presidential hopefuls spoke out over the weekend on the failure of Silicon Valley Bank, offering early hints of their varied approaches to the markets.
Trump, who is widely considered the frontrunner among the early field of official and likely candidates, took the opportunity to lash out at President Joe Biden, while offering no specifics about how he would handle the situation differently.
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In a Truth Social post on Saturday, Trump issued an all-caps prediction that “WE WILL HAVE A GREAT DEPRESSION FAR BIGGER AND MORE POWERFUL THAN THAT OF 1929. AS PROOF, THE BANKS ARE ALREADY STARTING TO COLLAPSE!!!”
That claim came as Trump’s spokesman asserted in a statement to Fox News that “Biden has presided over a catastrophic economy that has devastated everyday Americans and has caused misery across the country due to his anti-America policies.”
Meanwhile, Florida Gov. Ron DeSantis, who is seen as Trump’s top Republican competitor even though he has yet to officially announce a White House bid, suggested that diversity, equity and inclusion initiatives were to blame for the bank’s failure.
“This bank, they’re so concerned with DEI and politics and all kinds of stuff, I think that really diverted from them focusing on their core mission,” DeSantis said in a Fox interview Sunday morning.
SVB’s website had a page touting its embrace of diversity initiatives — but experts have attributed the collapse to a chain reaction stemming from interest rate hikes and the bank’s failure to effectively hedge against it.
DeSantis also appeared to complain about over-regulation, saying, “We have a massive federal bureaucracy and yet they never seem to be able to be there when need them to be able to prevent something like this.”
Silicon Valley Bank, or SVB, was shuttered by financial regulators last week, marking the largest failure of a banking institution since the 2008 financial crisis. The sudden collapse of the nation’s 16th-largest bank, a major player in the tech industry, set off a wave of fear about whether the fallout will spread to other major banks.
The government on Sunday evening announced a plan to ensure that depositors at SVB and Signature Bank, a main lender to the cryptocurrency industry that was also shut down, will have full access to their deposits. Bank regulators emphasized that taxpayers won’t cover the costs to insure deposits. A special fee will be assessed to federally insured banks to replenish the Deposit Insurance Fund, they said.
Biden in a speech Monday called for a “full accounting” of the situation and for steps to be taken to reduce the risk of future bank failures. He also noted that “investors in the banks will not be protected,” adding, “That’s how capitalism works.”
Biden, who is expected to announce he will run for reelection in 2024, delivered the speech after multiple possible rivals weighed in on the crisis.
Former South Carolina Gov. Nikki Haley on Saturday night declared, “taxpayers should absolutely not bail our Silicon Valley Bank.”
“Private investors can purchase the bank and its assets. It is not the responsibility of the American taxpayer to step in,” Haley said in a statement, adding, “The era of big government and corporate bailouts must end.”
The Biden administration has bristled at the notion that it is bailing out the banks, with officials noting that shareholders and bond holders at the banks are not being protected.
In a follow-up tweet Monday, Haley took issue with that spin.
“Joe Biden is pretending this isn’t a bailout. It is,” she tweeted. “Now depositors at healthy banks are forced to subsidize Silicon Valley Bank’s mismanagement. When the Deposit Insurance Fund runs dry, all bank customers are on the hook. That’s a public bailout.”
She said that SVB depositors should be paid by selling off the bank’s assets.
Trump also accused “out-of-control Democrats” of blaming Trump for the collapse. Some lawmakers, including Sen. Bernie Sanders, I-Vt., and other critics have recently pointed to legislation signed by Trump in 2018 that rolled back some banking regulations. The bill received bipartisan support in Congress, though some Democrats criticized the measure at the time.
“Let’s be clear. The failure of Silicon Valley Bank is a direct result of an absurd 2018 bank deregulation bill signed by Donald Trump that I strongly opposed,” Sanders said in a statement Sunday.
Vivek Ramaswamy, an entrepreneur and conservative political commentator who jumped into the GOP primary race last month, had argued on Twitter that the government should “let SVB fully fail” without protecting its depositors.
The Federal Deposit Insurance Corp., “should get out of the way & let whoever wants to acquire SVB to actually do the deal,” Ramaswamy tweeted Saturday.
Steve Laffey, another GOP presidential candidate, in a statement Saturday said that his own party and the U.S. more broadly “have avoided directly confronting our problems for many years, and the results have been disastrous.”