Rep. Katie Porter: "The collapse of Silicon Valley Bank was totally avoidable."

[tblue37]

Link to tweet

The collapse of Silicon Valley Bank was totally avoidable.

In 2018, Wall Street pushed a deregulation bill that allowed banks like SVB to take reckless risks. It passed, even as I and many others warned of the risks.

I am writing legislation to reverse that law, S. 2155.

[Stargleamer]

1. She's really good. . .

we have 3 excellent candidates to vote for in Katie Porter, Barbara Lee, and Adam Schiff.

[TheRealNorth]

5. +1

We need to get in front with a narrative, lest Faux News and Republicans point fingers at a villain (poor black people, wokism, etc)

[Evolve Dammit]

9. Could we spread them around to other states??

[FSogol]

2. K&R n/t

[SheltieLover]

3. No doubt!

[Brother Buzz]

4. Wait a minute, Joe Biden was President in 2018?

I understand the pubs are trying to dump this mess on Biden's lap

[IronLionZion]

13. That's how GOP deregulation works

bad things happen afterwards, and it's usually someone else in charge by then

[The Unmitigated Gall]

6. Another republican't bank failure

Republicant’s can’t do anything right.

[CTyankee]

7. She's one of my heroes!

We Dems have a power house. We're just getting started...

[Fiendish Thingy]

8. 50 Dem reps and 17 Dem senators supported the bill

It bypassed a filibuster.

And now, Eric friggin’ Swallwell is calling for taxpayers to bail out all the rich, risk taking depositors, not just those with insured assets below the FDIC max of $250k.

[Phoenix61]

10. Dems need to remember what happened to their former

colleagues who voted for the Crapo Bill. (Really, that’s its name)


Adam Jentleson

@AJentleson
·
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One of the all-time stupidest votes. This bill had no business passing.

Victoria Guida

@vtg2
At least three Senate Democrats who backed the landmark financial deregulation bill this year lost their reelection campaigns despite their efforts to work across the aisle, in a potential setback for the banking industry. w/@Zachary

https://politico.com/story/2018/11/07/banking-financial-services-committees-see-shakeup-in-blow-to-industry-2164813…
10:32 AM · Nov 8, 2018
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https://theintercept.com/2018/11/10/dodd-frank-deregulation-midterms-2018/

[BidenRocks]

11. Too many good people running

I believe Schiff will win.
I wish other states had candidates of this caliber.
You know who I'm looking at.

[womanofthehills]

25. Some early polls had Katie ahead

She’s my favorite- she takes instant action

[progressoid]

12. Wonder if MSNBC / Morning Joe will have Claire McCaskill on to explain why she supported the bill.

Probably not.

[Celerity]

15. Complete list of the 17 Democratic Caucus Senators who voted to partially gut Dodd-Frank

https://www.senate.gov/legislative/LIS/roll_call_votes/vote1152/vote_115_2_00054.htm#top

Bennet (D-CO)

Carper (D-DE)

Coons (D-DE)

Donnelly (D-IN)

Hassan (D-NH)

Heitkamp (D-ND)

Jones (D-AL)

Kaine (D-VA)

King (I-ME)

Manchin (D-WV)

McCaskill (D-MO)

Nelson (D-FL)

Peters (D-MI)

Shaheen (D-NH)

Stabenow (D-MI)

Tester (D-MT)

Warner (D-VA)

Complete list of the 33 Democratic Caucus House Members who voted to partially gut Dodd-Frank

https://clerk.house.gov/Votes/2018216

Bera Democratic California YEA
Bishop Democratic Georgia YEA
Blunt Rochester Democratic Delaware YEA
Carson Democratic Indiana YEA
Correa Democratic California YEA
Costa Democratic California YEA
Cuellar Democratic Texas YEA
Davis, Danny Democratic Illinois YEA
Delaney Democratic Maryland YEA
Foster Democratic Illinois YEA
Gonzalez Democratic Texas YEA
Gottheimer Democratic New Jersey YEA
Hastings Democratic Florida YEA
Himes Democratic Connecticut YEA
Kind Democratic Wisconsin YEA
Kuster Democratic New Hampshire YEA
Larsen Democratic Washington YEA
Lawson Democratic Florida YEA
Maloney, Sean Democratic New York YEA
Murphy Democratic Florida YEA
Nolan Democratic Minnesota YEA
O'Halleran Democratic Arizona YEA
Peters Democratic California YEA
Peterson Democratic Minnesota YEA
Rice Democratic New York YEA
Schneider Democratic Illinois YEA
Schrader Democratic Oregon YEA
Scott, David Democratic Georgia YEA
Sewell Democratic Alabama YEA
Sinema Democratic Arizona YEA
Suozzi Democratic New York YEA
Veasey Democratic Texas YEA
Vela Democratic Texas YEA

[Celerity]

18. "It's a bad bill under the guise of helping community banks," Representative Nancy Pelosi of

California, the Democratic minority leader, said during debate on the House floor on Tuesday. “The bill would take us back to the days when unchecked recklessness on Wall Street ignited an historic financial meltdown.”

https://www.nytimes.com/2018/05/22/business/congress-passes-dodd-frank-rollback-for-smaller-banks.html

[The Magistrate]

24. That The Great Trick, Ma'am

Getting people to think the mom-and-pop shop down the street is indistinguishable from Walmart in its economic and political interests.

[progressoid]

21. Grrr...

[Warpy]

14. Exactly, so don't blame it on Biden, RWNJs, because we know better

It doesn't help that the parent company was into the cryto game...late.

Deregulation fever--I keep hoping it has finally run its course every time something like this happens, but RWNJs just never seem capable of looking into the mirror long enough to figure out where the problems came from.

Deregulation will eventually give us the next financial collapse, one way or another..

[Yo_Mama_Been_Loggin]

16. Yep

More laws that the Mango menace and his MAGAts rolled back.

[uponit7771]

17. SVB Stupidly held onto US bonds there were losing value instead of trading them in and getting ...

... some assets the didn't have to wait on maturity.

It was stupid, really stupid for their "on hand" cashflow

[jaxexpat]

19. So it was simple incompetence. Maybe laziness..... or organizational flaws.

Could be that for a few days the guy in charge of trading to maintain solvency was on a drunk because his wife or husband left them. Then again maybe it was because the penalties for common incompetence are different than for delinquent regulatory abeyance.

Come on guys, regulations make banking people nervous. So nervous that they make careless errors. Should a well meaning bank officer suffer because he screws up due to any number of good excuses? Would onerous regulations really prevent malfeasance or math errors? Or, wouldn't it be too expensive to employ enough personnel to ensure regulatory compliance? Think of the children, the trust fund children.

Endless the poor will happily pay powerful people are the nicest people old money is refined

[flashman13]

20. Sorry But the story of the demise of SVC is complicated and didn't involve reeklessness.

To summarize severely, SVB had a very complicated relationship with venture capitalists and Silicon Valley start ups that had the consequences of loading SVB's vault with huge amounts of cash on hand. This was during the big covid slow down. Loans were down and very soon interest rates crashed to near zero. There was no place for SVB to put the money so they bought a very large amount of 10 year U.S. bonds bearing around 1.5% per year. Now comparable bonds are at 4+%. SVB bonds are no longer worth their face value on the open market.

Ok The bank is humming along. Cash is parked in boring but reliable bonds. Nothing unusual is on the horizon. And then ...... lightning strikes. Early in the week a very respectable and successful economic guru tells his associates and recipients of his wisdom that they should pull their deposits at SVB. They do. Word gets out. More gurus and accolades pull their deposits. By now SVB's cash on hand, liquidity, is exhausted so they sell a significant percentage of their bonds on the open market to raise cash to try to keep depositors at bay. They take a significant loss on investment. More depositors cash out. Panic hits Wall Street and SVB stock prices crater -60+%. The FDIC steps in to halt the mayhem in an attempt to conserve assets for later disbursement.

Now comes the question: would some sort of regulation(s) have prevented the collapse of SVB? There was nothing especially risky in their operation. It was something of a perfect storm. It was a classic run on the bank. The gurus undermined confidence in SVB. The run started, panic set in and ran its course ending at the door of the FDIC. My answer would be NO.

Here is the scary part, SVB went under because the financial industry is rapidly decompressing from years of near zero interest rates. SVB is not the only institution loaded up with super low return bonds. Many of them resemble SVB. We have just witnessed in the age of high speed transactions just how quickly a financial institution can crash. All it takes is a whisper.

[druidity33]

22. Thiel is a chaos agent...

and why exactly do banks have stock prices? They may technically be businesses, but won't being listed erase some of your money (like everyone else) if the market crashes?

[Buckeyeblue]

23. I agree that the scary part is how quickly money can be moved now

What, if anything, is in place to prevent something like this from happening to any bank?

I know there are controls to monitor electric banking activity but I'm not sure those controls are built to anticipate a run on the bank. Mainly, they are in place to detect fraud.

[Tickle]

26. a little late on the legislation

to save this bank but hopefully if it passes it will save other banks