The collapse of Silicon Valley Bank left Republicans scrambling to digest its ramifications and divided on their messaging.
Some Republicans were quick to go for “woke,” linking the collapse of the institution that catered mostly to tech start-ups and venture capitalists with policies like environmental, social and governance (ESG) investments and diversity and inclusion initiatives.
But others sought to rein in their colleagues and take a more measured approach.
Rep. James Comer (R-Ky.), chair of the House Oversight and Accountability Committee who was previously the director of a Kentucky bank, said on Fox News’s “Sunday Morning Futures” that Silicon Valley Bank was one of the “most woke banks in their quest for the ESG-type policy and investing.”
Gov. Ron DeSantis (R-Fla.) echoed that on the same program, saying that the bank’s concern with diversity and equity initiatives and politics “really diverted from them focusing on their core mission.”
Some, like Rep. Marjorie Taylor Greene (R-Ga.) and Sen. Josh Hawley (R-Mo.), suggested regulators stepped in with a backstop to deposits over the typical $250,000 mark because of the company’s left-wing values. “SVB = too woke to fail,” Hawley tweeted.
That built on a message Republicans have unified around on the campaign trail and in Congress. They recently pushed a bill to nullify a Biden administration rule on ESG investing through both the House and Senate.
But those remarks were widely criticized.
A rush of depositors moving to withdraw their funds, combined with a high rate of assets tied up in bonds that were saddled with large unrealized losses due to inflationary pressures, are thought to be the main drivers of the collapse.
By Tuesday, a more reserved response emerged from top Republicans. They stressed inflation had been a major contributing factor to the stress on Silicon Valley Bank and knocked the institution’s management, but did not fault the measures taken by regulators.
“We have politicians dancing around in a hackish way trying to drive their own agenda. We have folks that are opining so that they can actually have a greater platform,” House Financial Services Chairman Patrick McHenry (R-N.C.) said on CNBC Tuesday morning.
He added he thinks the Federal Reserve and Federal Deposit Insurance Corp. are “doing the right thing” in accordance with the law.
House Republicans held a conference call on Monday night with members, with McHenry and House Financial Services Committee Vice Chair French Hill (R-Ark.) walking through the Silicon Valley Bank situation.
Rep. Kevin Hern (R-Okla.), chair of the conservative Republican Study Committee, spoke up to raise concern about members speaking out on social media without fully understanding the situation, according to a source familiar with the call. Hern’s comments were first reported by Politico.
House GOP Chair Elise Stefanik (N.Y.), who is tasked with messaging for the conference, said Republicans should hammer President Biden for the collapse. But Hern responded that not all the messaging had to be political, according to the source.
“In the near term, the important thing is to be an adult and not assign political blame right now,” Rep. Andy Barr (R-Ky.), who chairs the House Financial Services subcommittee overseeing the FDIC and other regulators, said on Fox Business on Tuesday.
But Barr also said that the situation was a “failure of bank management, but also a failure of bank supervision, and a failure of government policy as the underlying cause — overspending by the Democrats that fueled inflation and then a monetary policy that kept interest rates too low for too long.”
As the dust settles, Republicans appear to be coalescing around the argument that Democratic spending and policies worsened inflation and contributed to the bank’s collapse.
That was the message from Speaker Kevin McCarthy (R-Calif.) in his first public statement alluding to the Silicon Valley Bank situation after the federal government’s decision to insure all deposits.
“Biden’s reckless spending caused record inflation and rapid interest rate hikes that broke family budgets and banks too. We must restore fiscal sanity,” McCarthy tweeted on Tuesday.
And National Republican Committee Chairwoman Ronna McDaniel tweeted that Biden’s “still-raging inflation set the stage for the worst banking crisis since 2008.”
Republicans are also starting to push back on some Democrats eyeing stricter rules for banks.
Sen. Elizabeth Warren (D-Mass.) is among those pointing to the Trump-era rollback of the 2010 Dodd-Frank Wall Street Reform Act as a contributing factor in the Silicon Valley Bank collapse. Warren argued that if the bank had been subject to liquidity, capital and stress test requirements, it could have been able to weather the stress that brought it down.
But Republicans are putting focus on the effectiveness of regulators themselves rather than the substance of the regulations.
“The underlying causes [were] basic fiscal and monetary policy errors and a failure — not of a lack of regulation — but inadequate bank supervision,” Barr said on Fox Business. “The regulators need to do some soul searching about extracurricular political errands they are on instead of basic nuts and bolts bank supervision.”
“Where was the San Francisco Federal Reserve Bank?” Hill similarly said on Newsmax Tuesday. “And where was the California State Bank regulator over the past 2 1/2 years, supervising and assessing Silicon Valley’s management?”