US politicians wasted no time turning the collapse of Silicon Valley Bank into a blame game. Euronews has fact-checked each side's accusations.
ADVERTISEMENTSince the collapse of the Silicon Valley Bank (SVB) on Friday, Republicans and Democrats in the US wasted no time in turning the crisis into a political blame game with both sides accusing their opponents of causing the meltdown.
So, what accusations and insinuations are being made on both sides, and are any of them true?
Euronews' The Cube fact-checked multiple claims.
Is Donald Trump to blame for the bank's failure?
Some Democrats, such as Elizabeth Warren, blamed former US president Donald Trump for easing regulations on mid-sized banks.
"When Donald Trump signed a bill rolling back 'too big to fail' rules for banks like Silicon Valley Bank, I warned that it was putting our economy at risk. I wish I'd been wrong. But these recent bank failures are the direct result of weaker rules," tweeted the Massachusetts senator.
In 2018, the Republican-led Congress under Trump reclassified which banks are considered "too big to fail," the notion that the failure of some institutions would be more catastrophic for the economy than the cost of supporting them.
In a bill also signed by certain Democrats as well, Congress increased the threshold from banks holding at least $50 billion (€47.2 billion) in assets to those with $250 billion (€236 billion).
That means only the biggest institutions could then face strict regulations such as maintaining a certain amount of liquidity.
That meant that SVB, which had more than approximately $200 billion (€189 billion) in assets, was exempt from these rules.
Could this meltdown have been prevented if the law had never been amended? Ultimately, we'll never know if SVB could have avoided a collapse but experts do believe the deregulation paved the way to its demise.
"The relaxation of regulations in 2008 during the Trump administration was a mistake," said Antonio Fatas, a professor of economics at INSEAD.
"I think, unfortunately, banks have to be heavily regulated. That's the reality. Otherwise, we end up with one crisis after another," he told Euronews.
Did more banks fail under Trump?
Other pro-Democrat Twitter accounts decided to play the partisan "whataboutism" claiming that at least 15 banks failed under Trump.
"More people should be talking about the fact that 15 banks failed while Donald Trump was president," said one pro-liberal account.
The son of the former president, Donald Trump Jr hit back saying: "I don’t remember banks collapsing under Trump… but don’t worry guys it’s only a matter of time till Biden/media blames him for that too".
According to the Federal Deposit Insurance Commission (FDIC), there were indeed 15 bank failures during Trump's presidency: four in 2020, four in 2019, and seven in 2017.
But the banks that closed during Trump's presidency were significantly smaller in size than Silicon Valley Bank.
The largest was Seaway Bank and Trust Company which failed in 2017 and had $361.2 million (€341.5 million) in assets.
ADVERTISEMENTBank failures aren’t especially uncommon. There have been 565 since 2000, even in non-recession times.
Is wokeness to blame for SVB's failure?
On the Republican side, politicians such as Ronny Jackson blamed the bank’s supposed "woke" agenda for its collapse, suggesting it invested too much into diversity and inclusion initiatives.
But experts believe this could not have created the sudden nosedive.
"I don't see anything which is different from any other banking crisis. There's no 'woke' investment," said Fatas.
"This is a pure mismanagement of risk between their assets on the liability side, and again, this is almost a textbook case of how a bank should not be run," he told Euronews.
ADVERTISEMENTMoreover, an anti-woke bank collapsed in 2022 after it failed to secure more funding in Texas, so the political leanings don't seem to be the reason behind its closure.
