WASHINGTON, D.C.—Following today’s Senate Banking hearing on the recent bank failures, U.S. Senator Steve Daines appeared on Fox Business’ Cavuto: Coast to Coast to talk about what led to Silicon Valley Bank’s failure including President Biden’s inflation crisis and the Federal Reserve Bank of San Francisco’s wokeness.
Daines on the cause of Silicon Valley Bank’s failure:
“Neil, I just came from the Banking hearing. We had, basically one of the top regulators of the Fed who was before the Banking Committee and we were pressing him about what happened at Silicon Valley Bank, why did the bank fail? Think about banking, banking is about managing risk. It’s true if a bank makes a loan. That’s also true in terms of bank management and regulators looking at assets and vulnerabilities.
“Remember back in the first quarter of 2021 the Democrats, on a purely partisan vote here, passed a $1.9 trillion spending package opposed by every Republican, supported by every Democrat and signed by President Biden. That was going to add inflationary pressure to this economy in fact, Lawrence Summers said that clearly. Clinton’s former Secretary of Treasury made it clear he was warning Democrats, ‘don’t do this. It creates inflation.’ So now we have 40-year high inflation. We have the Federal Reserve making significant moves upward in interest rates, and what happens, it creates great risk for these banks. They’ve got to manage that much more effectively.
“And if you look at what happened in San Francisco, the San Francisco regulators were focused on climate change risks. In fact, we went right to their website. ‘What’s top of mind for our work in the 12th district?’ That’s a San Francisco district. This is back in October of last year, it said ‘financial risks from climate change.’ They were asleep at the wheel and compare that to the Richmond District. That’s the fifth district of the Federal Reserve. They said ‘rising rates and interest rates’ will need to be focused on in terms of risk management. So, what you had here is you had a woke San Francisco group of regulators working with woke corporate executives at the Silicon Valley Bank. This was the perfect storm to take their eye off the ball of the real risk, which was rising interest rates, decrease in bond values and liquidity challenges.”
Daines on holding the regulators and bank managers accountable:
“Well, look, first you got to go back and see what actually happened. Develop the timeline, get the facts. It’s analogous to a plane crash investigation where the NTSB goes in develop the timeline, decisions made, and look at what exactly caused the collapse of that bank. Let’s get the facts first.
“The liberals always jumped towards bigger government and more regulations. I haven’t seen any evidence yet to suggest that is one of the solutions. We need to hold the executives accountable at Silicon Valley Bank. We need to hold the regulators accountable for not regulating just the basics of what’s already in place. And if you take a look at where they were focused, they were focused on climate change as being the biggest risk. It’s right there in the October memo they published of last year, when the biggest risks that other regulators identified and other parts of our country said it’s about rising interest rates.
“I’m not a banker Neil, but that’s pretty basic. I think you’re gonna see just massive negligence and failures of both the executives there, Silicon Valley Bank and the regulators in San Francisco district. Let’s focus on that before you need jerk reactions coming out of Washington DC.”
Daines on the risk of more failures:
“Well, you know, you hope and pray it’s not the case. And that’s why I think this got the attention of everybody and banks are reexamining their portfolios, as they should. But I tell you, we were questioning Secretary Yellen of this last year about the priorities that were going on in Treasury and the Fed. They had this this myopic focus on climate change as the biggest risk. Look, Neil, when we were having that debate, California was under a massive drought. They now have 50 feet of snow across much of California. So, guess what, Neil? There was climate change. Suddenly it started to snow, and rain again. It’s going to heal up that drought in California nicely. The natural cycles produce that.”
Contact: Matt Lloyd, Rachel Dumke, Blake Kernen