On Wednesday’s broadcast of MSNBC’s “All In,” House Financial Services Committee Ranking Member Rep. Maxine Waters (D-CA) stated that while the uninsured depositors at Silicon Valley Bank deserved to be helped, maybe those “who are thinking that they got special treatment have some arguments too.”
Host Chris Hayes asked, “I want to ask you a question about the decision-making process for the Fed and Treasury to take extraordinary actions to shore up and backstop some of the uninsured depositors of Silicon Valley Bank. Now I think, on the merits, there [are] arguments for it, but the process that produced it, I want to read you this reporting from The New York Times, there was a lot of lobbying behind the scenes and a lot of high-up people, including many prominent Democrats. Here’s an example: ‘Peter Orszag, former President Barack Obama’s first budget director…now chief executive of financial advisory at the bank Lazard, hosted a previously scheduled dinner at the bank’s offices in New York City’s Rockefeller Center. Among those in attendance were…a pair of influential Senators: [Michael D. Crapo, Republican of Idaho, and] Mark Warner, Democrat of Virginia. Both were sponsors of [a] 2018 law that rolled back [regulation] on smaller banks…Blair Effron, a large Democratic donor whose firm…had just been hired by Silicon Valley Bank to advise it on [its] liquidity crunch, was also there.’ What do you say to people who say, they got special treatment because they were wired and connected to upper-echelon Democratic Party members?”
Waters responded, “I’ve heard that there are some allegations such as what you just described, but one of the things we have to think about, we have to think about the entire system and whether or not we are at a point or at a time where we could basically cause what happened in 2008 when we discovered that, not only had Lehman Brothers failed, but it was contagious. And so, the first thing we have to think about is who’s involved and who’s getting harmed. Those depositors deserved to be helped. And while we have rules that the FDIC only protects those at about 250,000 or less, we had this bank with about 90% that [were] uninsured. These were start-up companies for the most part. And so, we could either say, well, we’re not worried about the jobs that are being lost. We don’t care about the payrolls that are not going to be met, but we didn’t do that. As a matter of fact, I think you’re correct when you say that maybe they deserved to be helped, but maybe some who are thinking that they got special treatment have some arguments too. Well, the fact of the matter is, I basically agree that we helped out the families, we helped out the start-ups, we helped out the workers, and we got those payrolls going. But that doesn’t say that we’re not going to go deep into the investigation just about how this bank operated. We know it was a go-to bank for start-ups. They could not get loans in the traditional bank[s]. And so, he basically concentrated on this group of start-ups that were coming to him from all over the country to this bank. But we need to know what we’re going to do in the future about those who are not insured…what role did these uninsureds play in the downfall of the bank.”
Follow Ian Hanchett on Twitter @IanHanchett
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