The blame game over who’s responsible for the collapse of Silicon Valley Bank, part of SVB Financial Group SIVB, and Signature Bank SBNY kicked off immediately following news that the 19th largest bank in the U.S. had failed.
The situation became worse when on Sunday, Signature Bank SBNY was shut down by regulators.
The two collapses mark the second and third largest bank failures in history, next to the collapse of Washington Mutual in 2008.
The Accusation Flinging: Donald Trump Jr. took to Twitter on Sunday to write, “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.” Trump Jr. then went on to blame Biden’s “out of control spending,” which he said caused record inflation and forced the Federal Reserve to raise interest rates.
On Monday, President Joe Biden addressed the situation at 9 a.m. EST, attempting to calm Americans, while adding “during the Obama/Biden administration, we put in place tough requirements on banks like Silicon Valley Bank and Signature Bank, including the Dodd-Frank Act to make sure the crisis we saw in 2008 would not happen again. Unfortunately, the last administration rolled back some of these requirements.”
The truth is that the Trump administration rolled back banking requirements and saw banks collapse under Trump’s term. In fact, according to the Federal Deposit Insurance Corp (FDIC), 562 banks failed since 2001, when George W. Bush became president; 16 of which collapsed under former President Donald Trump, according to Newsweek.
How Rolling Back Parts Of Dodd-Frank Played Into SVB’s Collapse: "Dodd-Frank implemented some specific rules around capital rules and leverage. They were the most aggressive for the larger interconnected banks but they were also quite strict for the smaller banks. SVB and many other banks claimed they were too tough on the smaller banks,” former Barclays CEO Bob Diamond said on CNBC on Monday.
“And if you recall, during the Trump administration, they were rolled back. So, we have had a period where had we not rolled those back, maybe we would have seen higher capital levels and less leverage in some of the banks that are under pressure today. And I think that has gone unnoticed," he continued.
How Many Banks Have Shuttered Since George W. Bush’s inauguration: During the eight years, between 2001 and 2009, when Bush was president, 50 banks failed, with 25 closures taking place in 2008, the height of the Great Recession.
In the aftermath of the recession, when Barack Obama was president between 2009 and 2017, 503 banks closed their doors; 248 (almost half) of the closures took place prior to July 21, 2010, when the Dodd-Frank Act was passed.
Although multiple cryptocurrency exchanges have crumbled under Biden, SVB and Silvergate Bank are the first to suffer that fate under the current administration.
Read Next: Why Silicon Valley Bank Collapsed: A Simple Explainer
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