>> The bank executives did some of them exactly what you would expect and that is
they boosted their profits by loading up on risk, and they boosted their salaries.
They boosted their bonuses all by taking on more risk and
it worked great right up until the banks exploded.
>> In the wake of the Silicon Valley Bank collapse, some democratic lawmakers
including Senator Elizabeth Warren and Representative Katie Porter
are proposing legislation that would reverse the deregulation,
the bipartisan bill that deregulated midsized banks like SVB back in 2018.
Now, we talked about that in great detail earlier this week.
Trump was just jovial and incredibly excited to sign that bill, but
make no mistake.
It was a bipartisan effort.
Because whether we're talking about Democrats or Republicans,
the banking sector provides bribes to both parties.
Legalized bribes, but bribes nonetheless.
They're just considered okay under our system,
because the Supreme Court has sanctioned them.
But with that said, the banking regulations that I'm referring
to have to do with the capital availability within a given bank.
When depositors deposit money into a bank, typically what a bank does is it take that
money and it invests it and that's how they make most of their profits.
Yes, they charge fees and they make a lot of money doing that as well, but
one of the main ways that they make money is they will take depositor cash and
they will invest it.
Now, the 2008 economic collapse was a disaster.
And under the regulations that passed after that known as Dodd Frank,
it required banks to have a certain level of capital on hand.
So should something happen to the economy?
Should there be a bumpy road ahead?
They will be prepared to provide the depositors money that they withdraw or
wanna withdraw from the bank, right?
Now in 2018, things changed and things change because Republicans
with the help of 17 democratic lawmakers supported loosening up
Dodd Frank regulations on the banking system and they don't regret it.
By the way, those 17 Democrats, they were interviewed by Huffington Post,
HuffPost and they were very clear that they have no regrets will get to their
comments in a minute.
You don't wanna miss it.
It is enraging to say the least, but
let's get to some more details about the deregulation here, okay?
So thanks to those deregulatory efforts, regulations that applied
to banks with $50 billion in assets no longer applied, okay?
The threshold for the regulations suddenly only applied
to banks that had $250 billion in assets or above.
And so one of the banks that lobbied real hard for
the deregulation happened to be Silicon Valley Bank, why?
Well, the two banks that failed last week,
Silicon Valley Bank and Signature Bank had less than 250 billion in assets.
So since they had 250 billion in assets or less than 250 billion assets,
the regulations didn't have to apply to them because of
the deregulation that took place in 2018.
Now SVB as we had reported to you earlier had engaged in some pretty
intense lobbying to ensure that they would be able to take advantage of some
deregulation touting SVB S deep understanding of the markets it serves.
Our strong risk management practices, Becker argued that was the head of SVB.
He's no longer the head, all of the executives have been fired.
Argued that his bank would soon reach $50 billion in assets which under
the law would trigger enhanced prudential standards,
including more stringent regulations, stress tests and
capital requirements for his and other similarly sized banks.
Becker insisted that 250 billion was a more appropriate threshold.
So what ended up happening is the Federal Reserve starts raising
interest rates and it hits the tech sector hard.
So the tech sector went from just swimming in the cash and
actually depositing a lot of money to suddenly needing to withdraw money.
Now SVB should have had the capital available,
the liquidity available to provide the funds necessary for
those withdrawals, but they didn't have that.
It turns out according to new reporting from the lever, the Federal Reserve
also deregulated midsized banks like SVB which allowed for them to invest
some of that deposit or money in more risky bets like private equities.
Now what the amount was, how much of an impact that had on its collapse?
We don't know yet, that analysis is still taking place, but
there was the congressional deregulation and
then the Federal Reserve also took part in deregulation as well.
But getting back to what Congress did, you now have a situation in which a midsize
bank like Silicon Valley Bank doesn't have the capital,
doesn't have the liquidity to provide the funds for the withdrawals.
And so the only thing that they can really do to raise capital is
sell their bonds, their government bonds.
But since interest rates went up, the value of those bonds went down and
they cashed in those bonds at a loss of about $1.8 million which led to a panic,
which led to a run on the bank, which led to its collapse.
You guys get the point.
Now he did get his way, he lobbied hard in order to accomplish this deregulation and
Becker got his way fast forward to last week.
SVB collapses and Warren, I think did a pretty good job in making it abundantly
clear that deregulation is a problem here.
And if we wanna ensure that we don't have a banking system that's built on a house
of cards, we need to reverse the deregulation that took place in 2018.
And so get a load of the insane framing, the CNBC host uses when talking to
Senator Warren about this reversal of the deregulation.
>> No question, there's going to be regulation out of this and
that's probably the right move.
But do you really think it should be a one size fits all policy where the smaller
banks will be able to deal with the cost of regulation the same one,
the same rules that the big banks have to face?
Won't it make that very hard for them to compete?
>> No, no, no, it's that banks above $50 billion will all
have the same set of rules in terms of having stress test and
just worst strengthen oversite.
All the banks under 50 billion won't be touched by this change in regulation.
They will still have the much lighter regulation that is appropriate for
banks that are not posing that kind of risk to the economy overall.
>> I mean, if you thought that framing was bad which I think it was,
it's clear that in this case, the CNBC host is like, I mean,
but do we really want to do this?
Do we really want to apply the regulations that were in place before 2018, I mean,
the poor, poor midsized banks?
If you thought that was bad, it's about to get worse, let's watch.
>> This is really about that portion of the change in the law back
in 2018 that said we're gonna lighten regulation for
banks larger than $50 billion,
the tranche between 50 billion and 250 billion.
And I think we've just seen that's too dangerous, too dangerous for-
>> I guess what I'm saying is even though
we're smaller- >> That's why we need to change the law.
>> Even those are much smaller though,
than the bigger banks that are more than 250 billion and we've had a number of
those CEO on the shows in the last two days, they do their own stress testing.
Not everyone was behaving in a risk profile,
in a risk manner at Silicon Valley Bank does.
>> I'm sorry, I taught school for many,
many years and I did not let my students do their own testing.
>> But Senator Warren, the lion told me that it wouldn't eat me, so
shouldn't we just believe the lion?
What kind of stupid naive thinking is that?
I mean, what the CNBC host is arguing in that framing there is,
well, some of these banks say that they self-regulate.
So if they're self regulating, do we really need to?
No, no, no, they're not self-regulating.
That's the whole point, banks are gonna do what banks are honestly supposed to do.
Just like with any business, they're gonna wanna maximize profits.
And if that means investing deposit or
money in risky investment vehicles, they're gonna do it.
They're gonna do it and nothing makes it clearer than what the banks did
with money that was printed by the Federal Reserve.
They were supposed to lend that money out to small businesses to stimulate
the economy following the 2008 economic collapse, you wanna know what they did?
They took the money, they put it in their pockets.
They took the money, they did their own investments and
maximize their profits further.
That led to an explosion in inequality in this country.
This is a CNBC host.
Listen, here on this show,
we're talking about policy that's not related to the economy.
We talk about all sorts of news stories.
We're not specialized in just talking about the markets, talking about banks.
We do those stories, but CNBC, that's all they do, right?
That's all they do and
somehow the CNBC host is sitting there as SVB collapses, okay?
As signature Bank collapses, as Credit Suisse is now dealing with some big
trouble and she's like, I don't know, do we really need to regulate?
Some of the banks told me that they'll self-regulate.
But if you're wondering how did this woman get hired,
that's the reason why she got hired at CNBC, okay.
Because the only thing that matters is how are the markets doing?
How's the stock market performing?
And the stock market for over a decade was incredibly bullish
based on deregulation and the Federal Reserve pumping money
into the economy, printing money, pumping it into banks.
Buying corporate debt, all sorts of nonsense that rigged the economic
system to the advantage of the richest people in this country,
the richest corporations in this country and
to the detriment of ordinary American workers.
Now let's get back to the despicable Democrats who were
asked by HuffPost about whether they regret deregulating,
joining Republicans in deregulating the banking sector back in 2018.
Well, Senator Tim Kaine who, let me just remind you was Hillary Clinton's
running mate says, no regrets, no regrets.
He says this, the reason why I voted for
that bill is that my community banks really needed it.
Did they need it?
What does that even mean?
Then he argues that the regulations were hurting local
communities and lending, in particular, rural and
underserved communities to be less served, okay?
As Elizabeth Warren clearly and accurately stated,
the previous legislation, the previous regulations
applied to banks that had assets above $50 billion.
So this argument that he needed to do the deregulation because the poor rural
communities in the smaller banks, I mean,
they were just really struggling with this deregulation.
It is a lie, he lied.
That's what that was, it was a lie, okay?
Neoliberal corporate Democrat doing what a neoliberal corporate Democrat does, okay?
Plain right, doing right by his donors, by the bankers in this case.
And again, to the detriment of the American people,
pretending to care about the rural community is laughable.
But Kaine then pivoted to the possibility that the social media posts are what
ends up spurring bank runs, maybe we need to look at social media posts.
No, maybe we need to regulate the banking sector, maybe we do that instead.
Senator Michael Bennet from Colorado, also a Democrat,
also said he didn't regret voting for easing regulations on banks.
Adding that quote, we have to do the analysis now to see what
actually happened at Silicon Valley Bank.
Senator Tom Carper repeated that same pathetic line.
I mean,
I can't say I regret it until a proper analysis is done to see what caused it.
Now that's a cop out,
deregulating the banking system is not what Democrats wanna be known for.
They think that they can do these votes and get away with it.
No one will notice, but we notice.
They wanna pretend they're so different from the corporate Republicans.
But when push comes to shove, if you're funded by the same donors,
you'll do right by those donors.
That's what Tim Kaine, Michael Bennett, Tom Carper, that's what they all did.
Tom Carper also says this, quote, we should find out what went wrong.
Why did it go wrong?
How do we fix it?
How do we make sure it doesn't happen again?
Hey, Tom, why don't you resign?
How about that?
Maybe it's time we actually have some real representation for
the American people instead of someone who's asking questions that a layman
would ask about this situation.
And you'll notice the democratic leadership including
President Joe Biden is avoiding any mention of the 2018 deregulation,
because he knows that there were 17 Democrats who voted in favor of it.
The other thing I want to just quickly mention is that Biden had no problem
mentioning Trump's deregulation when it came to the rail industry,
so it's not like he's afraid to call out deregulation.
But when you have Democrats playing a part in it, all of a sudden,
he can't use that line which is pretty pathetic.
Now the Johnny come lately, members of the Democratic Party are saying that
they're going to forgo campaign contributions from Silicon Valley Bank.
I'll give you a few examples.
Chuck Schumer, for instance, received $2,700 from
the banks pack in 2015 and $5,800 from CEO Greg Becker
in June of 2021 which is the maximum donation allowed.
Becker and other SVB executives have been purged in the government
takeover of the failed bank.
So now Schumer says that he's going to donate the money to charity,
same with Maxine Waters.
Representative Waters says that she will also get
rid of the money that she was given.
So she's a member of the House Financial Services Committee.
She told Politico on Tuesday that she will return the $2,500
contribution she got from the bank's PAC back in 2020 when she chaired that panel.
It's not just about Silicon Valley Bank, it's about all the corruption.
It's about all the bribes that these politicians take.
And if they think that this is what will clear them of any wrongdoing,
if this is what will appease individuals who just want a government
that does its job and protects the American people from the kind of
corporate greed that we've been experiencing, this is nothing.
Returning donations from a few years ago, it's a nice PR stunt, but do better.