Closing summary
Washington is on tenterhooks, waiting to see if the collapse of Silicon Valley Bank, and the government’s efforts to ensure its depositors can get their money, cause wider chaos in the economy. Democratic senator and Wall Street foe Elizabeth Warren said the California-based institution’s debacle is a sign that rolling back financial regulations in 2018 was not a good idea, while Republicans are blaming everything from Twitter to the woke mob. And on the 2024 campaign trail, Nikki Haley described the government’s intervention with the most infamous b-word: bailout.
Here’s what else happened today:
Joe Biden approved a major oil and gas drilling project in Alaska while protecting the Arctic ocean and millions of acres elsewhere in the state from petroleum exploration. Environmental groups are furious.
Social security is like Silicon Valley Bank: so says Republican senator Bill Cassidy.
Barney Frank was a champion of financial regulation during his time in Congress, but then sat on the board of a now-closed bank and said he doesn’t think tighter rules would have stopped the recent insolvencies.
Rupert Murdoch has not watched Succession, it turns out.
Have you been affected by the collapse of Silicon Valley Bank? Tell us.
The New York Times reports that after the GOP took control of the House, its oversight committee dropped an inquiry into whether Donald Trump profited improperly from his time as president.
The investigation had ensnared Mazars USA, an accounting firm used by the former president until they cut ties with him a year ago, and the oversight committee’s top Democrat has alleged that its Republican leader colluded with Trump in ending it.
“It has come to my attention that you may have acted in league with attorneys for former President Donald Trump to block the committee from receiving documents subpoenaed in its investigation of unauthorized, unreported and unlawful payments by foreign governments and others to then-President Trump,” Democratic lawmaker Jamie Raskin wrote to James Comer, the committee chair.
In an interview with the Times, Comer confirmed that the committee had dropped the inquiry, essentially saying they were now focused on scrutinizing current White House occupant Joe Biden.
“I honestly didn’t even know who or what Mazars was,” Comer said.
“They’ve been ‘investigating’ Trump for six years. I know exactly what I’m investigating: money the Bidens received from China.”
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The consequences of the January 6 insurrection continue to reverberate across Washington, including among Republicans. Here’s The Guardian’s Sam Levine on the growing divide within the GOP over the attack:
Some Republicans have rebuked efforts by Donald Trump and Fox News host Tucker Carlson to whitewash the January 6 attack on the US Capitol, underscoring a significant split in the party over attempts to downplay the events of the day.
Kevin McCarthy, the speaker of the House, turned over more than 40,000 hours of security footage from the Capitol to Carlson earlier this year. This week, Carlson aired selectively edited portions of that footage, falsely claiming the rioters were “sightseers” and “not insurrectionists”. At least 1,000 people have been arrested for their role in the January 6 attack. Five people died as a result of it.
More than 999 people have been arrested so far, according to the justice department. Around 518 people have pleaded guilty to federal crimes to date and 53 have been found guilty at trial.
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For more on how Silicon Valley Bank’s depositors will be made whole, and whether or not what the government is doing constitutes a bailout, here’s the Guardian Edward Helmore:
When is a bailout not a bailout? It’s a question many people are asking after the dramatic collapse of Silicon Valley Bank and the US’s decision to rescue depositors on Sunday.
Joe Biden, elected and appointed officials all insist the emergency interventions to protect deposits in Silicon Valley Bank, Signature Bank, a second bank that failed on the weekend, or, indeed, any further bank failures, won’t come at taxpayers’ expense.
On Monday, Biden was at pains to say that “no losses” would be borne by taxpayers, and the money would come from the fees that banks pay into the Deposit Insurance Fund.
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Republican senator Josh Hawley has spent the day accusing Silicon Valley Bank of promoting “woke” ideology, and now he wants to undermine the Biden administration’s efforts to make its depositors whole.
Based in Santa Clara, California, Silicon Valley Bank did a lot of business with the venture capital community, including startups focused on fighting climate change, according to the New York Times. To Hawley, that’s enough to earn it the amorphous “woke” moniker:
So these SVB guys spend all their time funding woke garbage (“climate change solutions”) rather than actual banking and now want a handout from taxpayers to save them
— Josh Hawley (@HawleyMO) March 13, 2023
Now Hawley, who is perhaps best known outside his home state of Missouri for promoting Donald Trump’s baseless conspiracy theories about the 2020 election and later running from the mob that attacked the Capitol, says he will stop the Federal Deposit Insurance Corporation from making a special assessment on American banks so that Silicon Valley Bank depositors don’t lose money:
Now we learn the Biden Admin will impose “special assessments” (= fees) on banks across the country to pay for the SVB bailout. No way MO customers are paying for a woke bailout. I will introduce legislation preventing any bank from passing these fees on to customers -
— Josh Hawley (@HawleyMO) March 13, 2023
And my legislation will exempt responsible community banks from the “special fees” to bail out the California billionaires
— Josh Hawley (@HawleyMO) March 13, 2023
The Guardian’s Edward Helmore reports on the changing fortunes of Fox News commentator Tucker Carlson, who is at the center of an increasingly intense controversy over his peddling of 2020 election conspiracy theories:
Tucker Carlson was once seen as untouchable. Now the most popular TV host on American cable news is at the center of a firestorm threatening to engulf Fox News and also anger Donald Trump, whose conspiracy theory-laden political cause he has long championed and who his audience loves.
Court filings attached to the $1.6bn Dominion Voting Systems defamation suit accuse Fox News of allowing its stars to broadcast false accusations about rigged voting machines in the 2020 presidential election.
The documents contained numerous emails detailing the private views and concerns of senior Fox management and its stars, which often seemed at odds with what they were publicly broadcasting to their audience.
The hit HBO show Succession is loosely based on his life as the patriarch of an unruly billionaire family, but that doesn’t mean Rupert Murdoch watches it.
Though the head of the rightwing media empire is under growing pressure amid a $1.6bn defamation lawsuit against his Fox News network, Murdoch recently took time to reveal that he has never watched the comedy-drama series that is set to launch its fourth season on 24 March, the Guardian’s Martin Pengelly reports.
A reporter for the media outlet Semafor got the scoop having contacted Murdoch after his email address was revealed in court filings pertaining to the lawsuit. Murdoch’s reply to the reporter’s email asking if he followed Succession reportedly was: “Never watched it.”
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An unlikely figure has found himself drawn into the recent wave of bank collapses: Barney Frank.
The former House Democratic lawmaker’s name graces the 2010 Dodd-Frank Act, which tightened banking regulations following the global financial crisis. It turns out, he was serving on the board of Signature Bank, which regulators on Sunday closed, making it the third American bank to fail in five days.
In an interview with Bloomberg News, he said he disagreed with the decision to shut down the New York-based institution. “I think that if we’d been allowed to open tomorrow, that we could’ve continued – we have a solid loan book, we’re the biggest lender in New York City under the low-income housing tax credit.”
More interestingly, he disputed that the 2018 rollback of parts of the Dodd-Frank Act played any role in the failures of Signature and other similar sized institutions – like Silicon Valley Bank. That legislation, signed by Donald Trump, raised to $250bn the level at which banks are subjected to the most strict oversight. Both Signature and Silicon Valley were below that amount.
“I don’t think there was any laxity on the part of regulators in regulating the banks in that category, from $50 billion to $250 billion,” Frank said in the interview.
The day so far
Washington is on tenterhooks, waiting to see if the collapse of Silicon Valley Bank, and the government’s efforts to ensure its depositors can get their money, cause wider chaos in the economy. Democratic senator and Wall Street foe Elizabeth Warren said the California-based bank’s debacle is a sign that rolling back financial regulation in 2018 was not a good idea, while Republicans are blaming everything from Twitter to the woke mob. And on the 2024 campaign trail, Nikki Haley described the government’s intervention with the most infamous b-word: bailout.
Here’s what else has happened today:
Joe Biden approved a major oil and gas drilling project in Alaska while protecting the Arctic ocean and millions of acres elsewhere in the state from petroleum exploration. Environmental groups are furious.
Social security is like Silicon Valley Bank: so says Republican senator Bill Cassidy.
Have you been affected by the collapse of Silicon Valley Bank? Tell us.
Louisiana’s two Republicans senators have been getting a lot of air time on Fox News lately, with John Kennedy appearing yesterday to complain about how Joe Biden recently put the GOP on the spot over social security. Here’s Maya Yang’s story:
The Republican senator John Kennedy accused Joe Biden of “demagoguing” the issue of how to fund social security and Medicare and protecting the two programs from Republican proposals to cut them, calling it a “very immature thing to do”.
Speaking to Fox News Sunday, Kennedy took aim at Biden for mentioning in his State of the Union address last month that some Republicans have proposed to “sunset” social security and Medicare as part of attempts to balance the federal budget.
“The problem is that President Biden in his State of the Union Address decided to demagogue the issue,” the Louisiana senator said. “We all saw it.
“He basically said, ‘If you talk about social security or Medicare, I’m going to call you a mean, bad person.’ And that just took the issue off the table when the president decided to demagogue it … You can only be young once, but you can always be immature, and I thought it was a very immature thing to do.”
Republican presidential contender Nikki Haley is describing the US government’s efforts to stop Silicon Valley Bank’s depositors from losing their money as a “bailout”.
It’s a politically loaded word, considering how deeply controversial Washington’s 2008 decision to help large banks during the global financial crisis remain.
Here’s her statement, on Twitter:
Joe Biden is pretending this isn't a bailout. It is.
— Nikki Haley (@NikkiHaley) March 13, 2023
Now depositors at healthy banks are forced to subsidize Silicon Valley Bank's mismanagement. When the Deposit Insurance Fund runs dry, all bank customers are on the hook. That’s a public bailout.
Depositors should be paid by… https://t.co/LDmCR9NOCd
Meanwhile, Republican senator Bill Cassidy has compared social security – the government program credited with keeping many elderly Americans out of poverty – to Silicon Valley Bank.
He made the comment in an interview with Fox News as he discussed social security’s very real problem of long-term funding:
Sen. Bill Cassidy (R-LA): “Social Security is the Silicon Valley Bank of retirement systems.” pic.twitter.com/J5N8nhnXko
— The Recount (@therecount) March 13, 2023
Biden administration approves massive Alaska drilling project
Joe Biden today authorized a major oil drilling project in Alaska that has angered environmental groups, who see it as a setback in Washington’s fight against climate change. In an effort to temper those criticisms, the president also banned drilling in the Arctic ocean, and protected millions of acres of land in Alaska. Here’s the Guardian’s coverage of one of the Biden administration’s most significant environmental decisions, from Oliver Milman, Nina Lakhani and Maanvi Singh:
The Biden administration has approved a controversial $8bn (£6bn) drilling project on Alaska’s north slope, which has drawn fierce opposition from environmentalists and some Alaska Native communities, who say it will speed up the climate breakdown and undermine food security.
The ConocoPhillips Willow project will be on of the largest of its kind on US soil, involving drilling for oil and gas at three sites for multiple decades on the 23m-acre National Petroleum Reserve which is owned by the federal government and is the largest tract of undisturbed public land in the US.
It will produce an estimated 576m barrels of oil over 30 years, with a peak of 180,000 barrels of crude a day. This extraction, which ConocoPhillips has said may, ironically, involve refreezing the rapidly thawing Arctic permafrost to stabilize drilling equipment, would create one of the largest “carbon bombs” on US soil, potentially producing more than twice as many emissions than all renewable energy projects on public lands by 2030 would cut combined.
Florida governor Ron DeSantis is among the Republicans expected to soon jump into the 2024 presidential race, and in a Fox News interview yesterday, he blamed Silicon Valley Bank’s collapse on the liberal policies he’s built a reputation for railing against:
DEI stands for “diversity, equity, and inclusion”, the sorts of initiatives DeSantis’s administration in Florida has made a point of targeting. He also blames the “massive federal bureaucracy” for letting the collapse happen – which is interesting, because during his time as a House lawmaker in 2018, he voted for the legislation that rolled back some of the 2010 Dodd-Frank financial regulations, which is now being blamed for Silicon Valley Bank’s collapse.
Updated
Republicans reacted to Silicon Valley Bank’s collapse by avoiding the question of regulation and instead pointing their fingers elsewhere.
Tim Scott, the top GOP lawmaker on the Senate Banking Committee, implied in a statement that the intervention could make financial institutions believe the government will bail them out, no matter what:
.@SenatorTimScott: "I strongly believe it is important we bring our markets to a calm and orderly resolution. Our financial services sector must stay strong and measured to serve the needs of the American people. Building a culture of government https://t.co/c4PHiJq0M5… https://t.co/IOKIKfYybE
— U.S. Senate Banking Committee GOP (@BankingGOP) March 13, 2023
The Republican chair of the House financial services committee Patrick McHenry blamed it all on Twitter:
#NEW: Chairman @PatrickMcHenry on recent regulatory actions regarding Silicon Valley Bank:
— Financial Services GOP (@FinancialCmte) March 13, 2023
“I have confidence in our financial regulators and the protections already in place to ensure the safety and soundness of our financial system.”
👇 Read more 🔗 https://t.co/EoF3Jm8691 pic.twitter.com/TllLdTHPTX
And senator Josh Hawley invoked East Palestine, just as he did a few weeks ago when the president visited Ukraine:
Joe Biden will probably visit Silicon Valley Bank before he visits East Palestine
— Josh Hawley (@HawleyMO) March 13, 2023
Updated
Democratic senator Elizabeth Warren is one of Wall Street’s biggest antagonists in Congress, and she is not pleased by the collapse of Silicon Valley Bank.
“No one should be mistaken about what unfolded over the past few days in the US banking system: These recent bank failures are the direct result of leaders in Washington weakening the financial rules,” she wrote in a New York Times column published today.
She directs most of her criticism towards the Trump administration and Republicans who in 2018 supported rolling back regulations that might have prevented the bank’s collapse, while also criticizing the now-closed institution’s leadership. “Greg Becker, the chief executive of Silicon Valley Bank, was one of the many high-powered executives who lobbied Congress to weaken the law. In 2018, the big banks won. With support from both parties, President Donald Trump signed a law to roll back critical parts of Dodd-Frank. Regulators, including the Federal Reserve chair Jerome Powell, then made a bad situation worse, letting financial institutions load up on risk.”
With Washington again picking up the pieces of a failed bank, here’s what Warren thinks needs to happen next:
First, Congress, the White House and banking regulators should reverse the dangerous bank deregulation of the Trump era. Repealing the 2018 legislation that weakened the rules for banks like SVB must be an immediate priority for Congress. Similarly, Mr Powell’s disastrous “tailoring” of these rules has put our economy at risk, and it needs to end – now.
Bank regulators must also take a careful look under the hood at our financial institutions to see where other dangers may be lurking. Elected officials, including the Senate Republicans who, just days before SVB’s collapse, pressed Mr Powell to stave off higher capital standards, must now demand stronger – not weaker – oversight.
Second, regulators should reform deposit insurance so that both during this crisis and in the future, businesses that are trying to make payroll and otherwise conduct ordinary financial transactions are fully covered – while ensuring the cost of protecting outsized depositors is borne by those financial institutions that pose the greatest risk. Never again should large companies with billions in unsecured deposits expect, or receive, free support from the government.
Finally, if we are to deter this kind of risky behavior from happening again, it’s critical that those responsible not be rewarded. SVB and Signature shareholders will be wiped out, but their executives must also be held accountable. Mr Becker of SVB took home $9.9 million in compensation last year, including a $1.5 million bonus for boosting bank profitability – and its riskiness. Joseph DePaolo of Signature got $8.6 million. We should claw all of that back, along with bonuses for other executives at these banks. Where needed, Congress should empower regulators to recover pay and bonuses. Prosecutors and regulators should investigate whether any executives engaged in insider trading or broke other civil or criminal laws.
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Have you been affected by the collapse of Silicon Valley Bank?
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How did we get here? How could one California bank’s problems end up potentially jeopardizing the entire US economy, to the extent that the government has to suddenly step in? For the answers, here’s the Guardian’s Jonathan Barrett:
Four decades ago, Silicon Valley Bank (SVB) was born in the heart of a region known for its technological prowess and savvy decision making.
The California-headquartered organisation grew to become the 16th largest bank in the US, catering for the financial needs of technology companies around the world, before a series of ill-fated investment decisions led to its collapse.
What happened to SVB?
As the preferred bank for the tech sector, SVB’s services were in hot demand throughout the pandemic years.
The initial market shock of Covid-19 in early 2020 quickly gave way to a golden period for startups and established tech companies, as consumers spent big on gadgets and digital services.
The next big indicator of whether the Silicon Valley Bank failure will spark a wider crisis may come from Wall Street.
Don’t worry, this isn’t going to become a stock market blog, but today, it’s important. Trading just started, and the three major indices, the Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite Index, are all lower – though only by about 1%, at most.
If markets really tank, as in, if they lose several percentage points in the course of the trading day, as happened when Covid-19 was breaking out across the United States three years ago, Washington could be pressured to more forcefully act to protect the banking sector.
Biden calls for Congress to restore Dodd-Frank protections
Joe Biden has called for Congress to restore banking regulations first implemented after the 2008 financial crisis but rolled back by Donald Trump.
The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act signed by Barack Obama increased financial regulations on banks in the wake of the crisis, but in 2018, Trump eased those rules – which Biden said set the stage for the failures of Silicon Valley Bank and Signature Bank, a New York-based institution that closed over the weekend.
“We must reduce the risk of this happening again,” Biden said. “During the Obama-Biden administration, we put in place tough requirements on banks, like Silicon Valley Bank and Signature Bank, including the Dodd-Frank law, to make sure that the crisis we saw in 2008 would not happen again. Unfortunately, the last administration rolled back some of these requirements. I’m going to ask Congress and the banking regulators to strengthen the rules for banks to make it less likely this kind of bank failure would happen again, and to protect American jobs and small businesses.”
He also called for an investigation into how the two banks went down.
“There are important questions of how these banks got into the circumstance in the first place. We must get the full accounting of what happened,” Biden said.
Updated
With many Americans still bitter over Washington’s assistance to large banks during the 2008 global financial crisis, Biden made a point in his speech of saying no bailout was happening under his watch.
“No losses, and this is an important point, no losses will be borne by the taxpayers,” Biden said. “Let me repeat that: no losses will be borne by the taxpayers. Instead the money will come from the fees that banks pay into the Deposit Insurance Fund.”
He also noted that “management of these banks will be fired”, and “investors in the banks will not be protected. They knowingly took a risk. And when the risk didn’t pay off, investors lose their money. That’s how capitalism works.”
Updated
Biden: 'Banking system is safe'
Speaking at the White House, Joe Biden is attempting to reassure Americans that the banking system will hold up.
“Thanks to the quick action in my administration over the past few days, Americans can have confidence that the banking system is safe,” the president said.
“Your deposits will be there when you need them. Small businesses across the country that deposit accounts at these banks can breathe easier knowing they’ll be able to pay their workers and pay their bills. And their hardworking employees can breathe easier as well.”
When Joe Biden speaks in a few minutes, he will have one goal: convince everyone to calm down.
His specific audience will be people who keep their money in small- and medium-sized institutions similar to Silicon Valley Bank, which are seen as most vulnerable to what economists call “contagion”. If customers at these banks believe they are going to collapse, as Silicon Valley Bank did on Friday, they will do what any sensible person would do and pull out their money – potentially causing the very crisis they fear, because such mass withdrawals would stress these banks’ financial underpinnings.
Biden speaks at 9am ET, and this blog will follow it as it happens.
Updated
Biden to reassure markets after bank collapse sparks fear of crisis
Good morning, US politics blog readers. We’re going to hearing from Joe Biden first thing this morning at 9am ET, after last week’s collapse of Silicon Valley Bank sparked fears of a crisis that could destabilize the world’s largest economy. The US government worked over the weekend to prevent that from happening, by announcing it had taken steps to make sure account holders at the now-shuttered California bank would be able to access all their money starting today, and announcing a new Federal Reserve credit line intended to fortify other institutions that are teetering on insolvency. Expect to hear plenty from lawmakers and 2024 presidential contenders about whether the moves are appropriate, or if Washington just pulled off another bank bailout. Perhaps more importantly, pay attention to the reaction on Wall Street when it starts trading at 9.30am – if markets plunge or more banks see runs on the deposits, the Biden administration may have to step in again.
Here’s what else is happening today:
Biden is traveling to San Diego for a meeting with the prime ministers of Australia and Britain and the announcement of a massive deal for new submarines.
Donald Trump’s former lawyer Michael Cohen is testifying before a Manhattan grand jury investigating hush money payments he made for the former president.
Mike Pence strongly rebuked Trump for his actions on January 6 in a weekend appearance, saying history would hold his former boss accountable for the insurrection.
