ANDY PUZDER: Biden’s insane spending juggernaut and waking-obsessed bankers have fueled this banking tsunami

Andy powder is a former CEO of CKE Restaurants, Chairman of 2ndVote Value Investments, Inc. and a Visiting Fellow at the Heritage Foundation

President Joe Biden announced Monday morning that his administration would conduct a “full accounting” of historic bank failures and “hold to account” those responsible for a new financial crisis.

He should look in the mirror first.

While the mainstream press searches in vain for alternative explanations, the collapse of the Silicon Valley Bank (SVB) and the ensuing hysteria lies at President Biden’s feet.

From Monday afternoon, the share prices of at least 20 regional banks collapsed, triggering a halt to trading. America’s four largest banks — Wells Fargo, Bank of America, Citigroup and JP Morgan — suffered a stock market crash. And hedge fund billionaire Bill Ackman warns that unless the US government steps in to guarantee all Americans’ regional bank deposits, the entire economy may stop working.

Despite the president’s assurances, the fear is real. And make no mistake – he created the conditions for today’s panic.

Remember, in 2021 former Clinton-Obama White House economist Larry Summers warned that Biden’s $1.9 trillion spending spree – ironically dubbed the “American bailout” – was a serious economic one represents a threat. Summers called it the “least responsible” economic policy in 40 years. Former Obama economic adviser Steven Rattner called it “the original sin.”

Both men recognized that lavish government spending would trigger runaway inflation, which would inevitably force the Federal Reserve to impose sky-high interest rates. But despite these warnings, the trillions in government spending just kept coming.

President Joe Biden announced Monday morning that his administration would conduct a “full accounting” of historic bank failures and “hold to account” those responsible for a new financial crisis. He should look in the mirror first.

While the mainstream press searches in vain for alternative explanations, the collapse of the Silicon Valley Bank (SVB) and the ensuing hysteria lies at President Biden’s feet.

The “American Bailout” was followed by a bill on infrastructure and green energy spending, absurdly dubbed the “Inflation Reduction Act.” Nonetheless, inflation remains unacceptably high today.

No wonder, then, that SVB was the first bank to fail in this environment. In fact, it’s hard to ignore the irony in it.

SVB — a West Coast regional bank — filled its coffers with deposits from Silicon Valley entrepreneurs, who were showered with billions of dollars in investments.

In Biden’s overheated economy, capital was easy to come by. But those who live by the sword die by the sword.

The bank took these deposits and invested them in low-yield and government bonds, sowing the seeds of its own destruction.

Because when the Federal Reserve inevitably hiked interest rates to cool the economy and tame raging inflation, investment in the tech sector dried up and SVB holdings lost their value.

That was totally predictable, why didn’t the SVB see it coming?

Well, her attention was elsewhere.

SVB’s chief risk officer resigned in May 2022. Her successor was not hired until 9 months later in January 2023.

This period coincides with the period when new deposits for the SVB stalled. With no new money coming through the bank doors, they should have realized they had a huge problem. But instead of taking action to correct course, the head of risk management at the UK SVB office launched international initiatives for equity and inclusion.

SVB has a website where you can read about their “commitments and progress to date on diversity, equity and inclusion”.

Of course, the SVB also has an “ESG Reporting” website, which states that it “covers the significant economic . . . Threats of climate change” (that’s the E in Environmental, Social and Governance).

In a 2022 report, the president and CEO of SVB’s parent company touted the company’s “long history of service.” [the ESG] Sector has enabled us to seize opportunities to build a better world and this report underscores our efforts, progress and commitment to transparency and accountability.’

SVB also pledged to lend at least $5 billion to “support customers’ sustainability businesses” and pledged to become auto-neutral by 2025.

SVB’s chief risk officer resigned in May 2022. Her successor was not hired until 9 months later in January 2023. (Above) People queue outside a Silicon Valley Bank office on March 13, 2023 in Santa Clara, California

In a 2022 report, the president and CEO of SVB’s parent company touted the company’s “long history of service.” [the ESG] Sector has enabled us to seize opportunities to build a better world and this report underscores our efforts, progress and commitment to transparency and accountability.’ (Above) Greg Becker, President and CEO of Silicon Valley Bank, speaks during the Milken Institute Global Conference in Beverly Hills, California

Unfortunately for SVB, there were other, more pressing economic threats, such as the potential impact of rising inflation on its bond portfolio and undiversified client base.

On Monday, this UK arm of SVB was bought by HSBC for around $1.22.

Perhaps US government agencies shouldn’t have done it, even if the SVB was blind to their exposure.

But again, there’s reason to believe they, too, were distracted.

In the aftermath of the 2008 financial crisis, the Financial Stability Oversight Council was set up to do just that – to sound the alarm on lurking threats.

The Council is made up of the country’s top Treasury officials – including Treasury Secretary Janet Yellen, Federal Reserve Chair Jay Powell and Gary Gensler, head of the Securities and Exchange Commission.

The council’s last meeting expressed urgent concerns about “climate-related financial risks,” which the group described as “an emerging threat to US financial stability.” Not on their list of concerns – bank panic due to interest-related portfolio losses.

And this isn’t the first time we’ve seen the impact of financial gurus succumbing to distractions that fall outside of fiscal common sense.

FTX founder Sam Bankman-Fried, dubbed the Crypto Black Knight by The Wall Street Journal, successfully promoted effective altruism and drove dust in the eyes of the world’s political and financial elites by saying all the right waking things.

He ended up being allegedly responsible for nearly $8 billion in lost client funds. But to his credit, he admitted that ESG and its progressive demeanor was a scam, albeit a costly one for its investors.

When will the administration learn its lesson?

Apparently not soon.

A pending new Labor Department rule seeks to undermine a law that requires fund managers — like those who oversee 401,000 million Americans — to generate financial returns for their clients that go beyond political or social goals. The Biden Rule would — you guessed it — make it easier for fund managers to advance left-wing causes by shielding them from lawsuits when those investments fail.

The factors that led to the collapse of the SVB are pervasive in our financial sector. If we treat the collapse of the SVB as a one-off event for a bank, we will bear the consequences of this decision for decades to come.

If you think it’s a stretch to think that the Biden administration would prefer bright political and social imperatives to basic financial common sense — think again.