The left, acting as it does, has done its level best to blame President Trump for the bank meltdowns now plaguing the U.S.
Some headlines seen on a DuckDuckGo search this morning:
And according to PolitiFact, Democrats are right there with them, pushing that “narrative” with those talking points:
Some Democrats, including Sen. Elizabeth Warren of Massachusetts and Rep. Katie Porter of California, blame bipartisan legislation signed in 2018 by then-President Donald Trump that eased regulations for all but the largest banks, including institutions like Silicon Valley Bank.
“No one should be mistaken about what unfolded over the past few days in the U.S. banking system,” Warren said in an op-ed in The New York Times. “These recent bank failures are the direct result of leaders in Washington weakening the financial rules.”
In remarks about the bank failure March 13, President Joe Biden echoed such concerns, saying, “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.”
Warren also wrote this in her op-ed:
Had Congress and the Federal Reserve not rolled back the stricter oversight, SVB and Signature would have been subject to stronger liquidity and capital requirements to withstand financial shocks.
In short, Trump did it.
Enter Barney Frank, whose name was on the 2010 banking reform bill, known as Dodd-Frank, that had caused all the problems. Turns out Trump didn’t cause the problem.
From his front-row seat, [Frank] blames Signature’s failure on a panic that began with last year’s cryptocurrency collapse — his bank was one of few that served the industry — compounded by a run triggered by the failure of tech-focused Silicon Valley Bank late last week. Frank disputes that a bipartisan regulatory rollback signed into law by former President Donald Trump in 2018 had anything to do with it, even if it was driven by a desire to ease regulation of mid-size and regional banks like his own.
“I don’t think that had any impact,” Frank said in an interview. “They hadn’t stopped examining banks.”
Trump signed off on a 2018 bipartisan deregulation bill that exempted smaller banks with assets below $250 billion from the Dodd-Frank banking regulations that were so onerous that they were killing off smaller banks.
The number of banks in the U.S. had shrunk precipitously in the wake of the 2010 Dodd-Frank regulatory bill.
Issues & Insights has an important lead editorial on the necessity, obviously on both sides of the aisle, for that 2018 amendment to the law here, citing an Investor’s Business Daily editorial they wrote at the time.
Small and midsize banks have been the main source of loans for small businesses, the main employers in America. In 2008, there were 8,345 small banks in the U.S. They made $388.8 billion in small business loans that year. By last year, there were only 5,954 small banks, lending just $308.4 billion. That’s 2,400 banks gone, largely due to Big Bank-friendly regulations such as too-big-to-fail put in place under Obama’s reforms.
The facts, though, don’t seem to be stopping today’s Democrats.
Trump did it. That makes it so much easier to hide that they did it. Notice how attractive this narrative is to Joe Biden, on whose watch banks are now starting to blow up. Trump did it, wasn’t Biden, and pay no attention to all that Bidenflation that caused the Fed to hikes rates that caused the bank imbalances that triggered the bank runs…
It’s much simpler, actually, to guys like Joe: Trump did it. Nicole Gelinas, writing at City Journal, has an excellent explainer piece here.
Frank, who served as chair of the House Financial Services Committee until he retired in 2013, wasn’t even in office when he was lobbying Congress to pass the amendment to the law with his own name on it, then as a board member of Signature Bank, which was shut down by regulators. He was out in the real world, learning just how crushing that law was on smaller banks.
Like the president of Silicon Valley Bank, he, too, lobbied for an amendment to the Dodd-Frank law, because it was killing small banks such as his own. A lot of them did. There’s nothing funny-business about that, despite the leftist bloviating now, and Frank argues that his bank wasn’t even insolvent when it was shut down. Based on its exposure to the servicing of the crypto industry, there was a run, and the collapse of crypto-focused Silvergate bank in San Diego, and Sam Bankman-Fried’s FTX crypto exchange had more to do with why the run happened than the lifting of the onerous regulations, he argued, and he may be correct.
Whether Signature Bank hedged for those market conditions as of now is unknown. We know that Silicon Valley Bank didn’t manage its risk — it went months without a risk manager. But that’s not a Trump issue at all.
Frank’s argument stands in stark contrast to the Warren argument calling for bigger and heavier regulation. Nobody brings up Bidenflation or SVB’s bad management, which seem likelier suspects for the problem than Trump.
We can see that as news of the bipartisan fix to Dodd-Frank has gotten out, news outlets have started toning down their Trump-blaming headlines.
Both NBC and Vox have since cleaned up those headlines on their landing pages, changing the word “Trump” to “bipartisan,” or “2018 banking law” or similar, removing the word “Trump,” but the incendiary headlines remain up on the searches, such as this one:
We know what they were after, and Barney Frank just blew that knee-jerk “Trump did it” narrative out of the water.