Are you angry yet? You should be. Our economy is slowing, banks are reeling, inflation remains scorching-high, real incomes are dropping, home prices are falling and Americans everywhere are becoming poorer by the minute.
On top of everything else, now we have the failures of Silicon Valley Bank and Signature Bank, infuriating bailouts and the resulting panic over banks. As with nearly everything that has gone wrong on their watch, including the inexcusable border chaos, the catastrophic pullout from Afghanistan and harmful inflation, the go-to response by the White House has been to blame President Trump.
Specifically, to blame Trump for signing legislation that loosened regulations on regional banks in 2018.That was Joe Biden’s message in the pitiful 5-minute address in which he tried but utterly failed to reassure the nation that our banking system is sound.
Here’s what Biden didn’t say: they knew. Regulators knew that Silicon Valley Bank was on the brink of failure. Supervisors spotted fatal weaknesses at the tech lender last summer, including some deemed “matters requiring immediate attention”; they told SVB management last fall that its model was flawed and could result in a run on deposits.
Despite the grave warning, the New York Times reports, management failed to change course and supervisors failed to act. By early this spring, SVB was in yet another review, this one on its risk management practices. Bottom line: there were none.
In other words, there were plenty of regulations and processes in place to prevent the catastrophe that occurred at SVB. Critics have assailed the San Francisco Fed, the supervisory authority, and its chief Mary Daly, for negligence. Some have rightly said that having SVB CEO Greg Becker on the overseer Fed board posed an obvious and dangerous conflict of interest.
It is hard to dismiss those who assert that the eagerness with which the Fed, the Treasury and the White House stepped in to bail out SVB and Signature Bank, caught in SVB’s backdraft, stemmed from the cozy relationships and giant political donations that Democrats receive from the tech community. It is, indeed, one big Happy Valley.
After all, the bailouts (which must not be called bailouts) infuriated our European allies, and are a great embarrassment to our globalist Treasury Secretary Janet Yellen, who surely resisted the rescue. Yellen has spent much of her tenure atop our financial edifice working to cede U.S. tax policy to international organizations. To that end she has lobbied financial regulators around the world promising, among other things, that the U.S. would never again bail out banks.
The Financial Times reports that Europe’s “top policymakers are seething” over the decision to cover all SVB’s depositors, “fearing it will undermine a globally agreed regime.” Those critics are reportedly shocked at the “total and utter incompetence” of U.S. authorities.
Yes, so are Americans.
It did not have to be this way. Do not forget who brought us to this sorry state. Do not be fooled. There is one and only one reason that Americans are struggling, that we are heading into a recession, and our banks are on thin ice.
President Biden, Democrats in Congress, Treasury Secretary Janet Yellen and Fed Chair Jay Powell have orchestrated a reckless trashing of our economy. In a shameless bid to buy votes, Biden and the Democrat majority in Congress spent trillions of unneeded dollars, mainly aimed at politically favored groups like the teachers’ unions and the climate lobby, driving the economy into warp speed and igniting inflation.
Jay Powell, hoping to be reappointed Fed Chair, ignored rising prices for months, continuing to buy hundreds of billions of dollars’ worth of bonds and mortgage-backed securities even as inflation topped 6%, aware that his only competition for the job was Lael Brainard, an avowed “dove.” Moving faster to tackle inflation might have cost Powell his job.
Meanwhile, Treasury Secretary Yellen became a cheerleader for blowing up the country’s deficits, all the while dismissing inflation as “small” and “manageable”; it wasn’t until the end of 2021 that she admitted it was not, after all, “transitory”. Once a respected economist, Yellen has become a political hack.
Joe Biden and Janet Yellen lie when they say the economy was “reeling” when he became president; it was actually growing at 6% and recovering nicely from the once-in-a-lifetime shutdown caused by COVID-19. Thanks to bipartisan efforts to prop up stalled businesses and consumers who had lost their jobs, the slump occasioned by the coronavirus pandemic was sharp but mercifully short-lived. The government expanded relief programs, the Fed lowered interest rates; the system was working as planned.
Jobs were coming back, inflation was only 1.4%, and consumer sentiment, key to spending, had rebounded sharply from the low of 72 on April 2020 to 79. (Last month, even before the bank problems, it stood at 67; in February 2020, before COVID hit, it stood at 101. Bravo Biden!)
Joe Biden took office and within weeks rushed to pass the American Rescue Act, throwing $1.9 trillion onto an economy plagued with supply chain problems. The bill passed with Democrat-only support, in part because Republicans recognized that it could prove inflationary (as even Democrat Larry Summers predicted.) Inflation indeed began to climb, to 4.2% in April 2021, and to a peak of 9.1% in June 2022.
The banking sector will likely calm, and inflation has dropped, but we are not out of the woods. There are recession signs aplenty and Biden has offered up a ludicrous and wasteful budget that Republicans must oppose. There will be a fight over raising the debt ceiling as the GOP pushes for needed spending restraint, which could get ugly.
But voters need to remember as the next election nears: it did not have to be this way. This was not an act of God; this was a reckless hijacking of our economy that put the entire country at risk.
Voters must fire those responsible.