GOP 2024 Candidate Ramaswamy Says Feds Should Let Silicon Valley Bank ‘Fully Fail’

Vivek Ramaswamy, the GOP 2024 presidential candidate, has called for the federal government to be more restrained in its response the the rapid collapse of Silicon Valley Bank (SVB), a tech-sector darling over the weekend amid calls for taxpayer bailouts for other bank failures.

Ramaswamy is a biotech investor and entrepreneur. He suggested that regulators should be able to deal with SVB’s failure on Saturday night. “let SVB fully fail.”

“No depositor amnesty for SVB depositors,” He  Follow us on Twitter. “FDIC [Federal Deposit Insurance Corporation] should get out of the way & let whoever wants to acquire SVB to actually do the deal.”

SVB was established in 1983. Its reputation for financing Silicon Valley tech startups led to it becoming the 16th-largest U.S. bank. SVB’s clients were mainly tech startups. Many of them were involved with climate change and some from California’s wine business. It also was exposed to crypto venture capitalists and startups in crypto.

On Thursday, however, investors and depositors tried to withdraw $42 billion in a bank panic.

Federal regulators intervened on Friday to shut down SVB. This was the largest bank failure in history since 2008’s Great Recession. According to a Bloomberg News analysis, 93 percent of SVB’s $161 billion in deposits was not insured by the Fed’s emergency lending authority, the FDIC.

Auctioning Underway

On Sunday, regulators will be in place Announcement they were closing another troubled crypto-focused lender—Signature Bank.

Regulators stated that all Signature Bank and SVB deposits would be guaranteed by the FDIC. They rejected a taxpayer-backed bailout for the bank’s investors and owners. It is possible to say FDIC would assume the risks of Signature Bank and SVB portfolios by bidding on their assets to repay depositors.

“The primary goal of the new programme is to reassure bank depositors that their funds are secure … to alleviate the type of near-term pressure that banks face as a result of run dynamics,” Financial Juice – Finance news aggregator Cite Federal Reserve officials speaking out.

“There is no definitive figure for what will be available in facility lending; The goal is to meet bank liquidity demand as it arises. Banks intend to hold the majority of the securities in question until maturity.”

Officials indicated that customers will be able to deposit on Monday as a result of the guarantees.

Ramaswamy said that while he supported the FDIC guaranteeing banks to prevent further bank runs due to negative sentiment, the guarantees should only go to other banks and be increased to $10 million. FDIC currently guarantees deposits up to $250,000. However, Treasury Secretary Janet Yellen said that the FDIC guarantee did not have an upper-value limit.

“By selectively changing the rules after the fact for SVB, the U.S. government now incentivizes greater risk-taking by banks & depositors in the future, teaching large depositors at smaller banks that they can simply throw money at risky banks without diversifying or conducting diligence (just like many tech startups did here),” Ramaswamy  The decision.

“Smaller banks like SVB lobbied for years for looser risk limits by arguing that their failures would not create systemic risk and thus would not merit special intervention by the U.S. government, but Secretary Yellen’s announcement reveals that argument to be a farce. Very disappointing.”

Earlier, Ramaswamy had Explained He explained why he didn’t see more risk to the U.S. banking system and his views on the triggers that caused the collapse of SVB.

“They’re skipping the fact that SVB’s situation is unique: a staggering *89%* of its deposits were uninsured (way higher than normal banks),” He wrote it on Twitter. “And they didn’t hedge interest rate risk which is a cardinal sin given the portfolio they held. Their real ‘hedge’ was to spend $$ to become popular in the right influential circles of their own depositors, pledging $5 billion in 2022 to ‘sustainable finance and carbon neutral operations to support a healthier planet.’ Maybe that hedge will pay off for their depositors if the government bails them out, but that should rightly trigger an ‘Occupy Silicon Valley’ of historic proportions.”

“Crony capitalism & fear-mongering reign supreme in America,” He added.

Other Republicans Get joined The Fed’s criticism “crony capitalism.”

Most Democrats in office are advocating crony capitalism. They want government bailout millionaire depositors over the $250,000 FDIC cap.

— Thomas Massie (@RepThomasMassie) March 13, 2023

Former President Donald Trump is also a 2024 GOP presidential hopeful. He blamed President Joe Biden for the bank failures. post Truth Social

“With what is happening to our economy, and with the proposals being made on the LARGEST AND DUMBEST TAX INCREASE IN THE HISTORY OF THE USA, TIMES FIVE, JOE BIDEN WILL GO DOWN AS THE HERBERT HOOVER OF THE MODRRN [SIC] AGE. WE WILL HAVE A GREAT DEPRESSION FAR BIGGER AND MORE POWERFUL THAN THAT OF 1929. AS PROOF, THE BANKS ARE ALREADY STARTING TO COLLAPSE!!!”

Dems Blame Trump for Dodd-Frank Reforms

Democrats blame Donald Trump, the former president, for bank failures. They say the Dodd-Frank Financial Reform Act, which he signed in 2018, is the culprit.

The Dodd-Frank reform increased the number of assets smaller banks could hold before mandatory oversight by the Federal Reserve was required to check on their exposure and management of risk. In the wake of 2008’s recession, the threshold for triggering oversight was raised from $50 billion to $250 billion assets.

At the time, the reforms had support from many Democrats—17 from the Senate and 33 from the House—which helped get the bank regulation bill through Congress.

“When the president signs this, we put community banks back in the mortgage lending business, which is really exciting for me,” Sen. Heidi Heitkamp (D-N.D.) Telled CNBC at the moment.

The Act did not remove restrictions from some regional and mid-sized institutions.

EJ Antoni, Heritage Foundation Research Fellow in regional economics Telled FOX Business reported Saturday that, while many may blame Dodd Frank, he saw the fall as the result an “unusual confluence of events.”

SVB “dealt almost exclusively with tech firms, which usually rely on continuously rolling over large debts,” This means that the firms are “not paying off their debt but simply taking out new debt to pay off the old,” He said.

He also pointed out SVB’s excessive holdings of Treasury bonds over the long-term, which decrease in value as interest rates rise. SVB’s clientele of undiversified clients decided they wanted to be a part of the SVB family. “needed cash all at once,” The failure was caused by the bank’s devalued bond liquidation, he stated.

“SVB was a case of mismanagement that was made possible by the unrealistically low rates from the Federal Reserve.”

Ed Moya is a senior market analyst at Oanda. Almost the same. Friday was explained that further contagion was unlikely. “smaller banks that are disproportionately tied to cash-strapped industries like tech and crypto may be in for a rough ride.”

“Everyone on Wall Street knew that the Fed’s rate-hiking campaign would eventually break something, and right now that is taking down small banks,” He said.

Biden Sunday’s unfolding crisis in crypto-sector funding was highlighted “I am firmly committed to holding those responsible for this mess fully accountable and to continuing our efforts to strengthen oversight and regulation of larger banks so that we are not in this position again.”

“The American people and American businesses can have confidence that their bank deposits will be there when they need them,” He added.

Rishi Sunak, British Prime Minister, said that his government was working hard to limit the negative ripple effects of the UK’s SVB UK arm collapse on British tech firms. He claimed that regulators were trying to find a solution that will protect customers’ liquidity as well as their cash flow.

Australian and New Zealand tech firms claimed that they were only exposed to crypto-sector issues.