March 14, 2023 12:37 PM UTC

Banking, Biden, and Boebert Baloney

• 11 Comments
• by: Colorado Pols

Congressperson Lauren Boebert (R-ifle) is not a particularly complicated politician. Boebert only has one setting no matter the issue being discussed: Yell at Joe Biden.

It is not uncommon for Boebert to go overboard in her anti-Biden zeal, particularly when the topic being discussed is complicated enough that she might have to stop and do a little reading in order to actually understand the issue. But conducting research or reading memos would take time away from drafting her next Biden rant, so she skips that part and goes straight to the yelling.

It’s fair to say that you could criticize Boebert for many of her comments, whether from social media posts, Congressional committee hearings, or wacky House Floor rants. But sometimes Boebert pushes a narrative that is so completely false that it can be harmful to the country as a whole. This is what Boebert has been doing in response to the failure of two big banks: Silicon Valley Bank (SVB) and Signature Bank of New York (SBNY).

This rhetoric is particularly dangerous because there are plenty of Boebert followers who will believe — to some extent — that the Biden administration is “bailing out” these two failed banks and picking favorites in deciding which banks get government help. But that isn’t what is actually happening. 

We can quickly dispense with Boebert’s favoritism claim; SBNY was a go-to bank for Donald Trump and son-in-law Jared Kushner, and Ivanka Trump sat on SBNY’s board of directors.

The bigger issue is that the government is not “bailing out” these failed banks. The federal government is instead playing a role it first started in the 1930s to backstop the economy and protect regular depositors. You might be familiar with one of these central concepts: The Federal Deposit Insurance Corporation (FDIC), which guarantees the money people deposit in a bank up to a certain amount. The FDIC is supposed to protect depositors from a bank failure — that’s why it exists and why you see those little signs about the FDIC whenever you speak with a bank teller.

As White House economics reporter Jeff Stein explains for The Washington Post:

The Federal Deposit Insurance Corporation will guarantee all deposits at SVB and Signature — even those above the usual $250,000 limit. SVB held roughly $150 billion in uninsured deposits, and Signature Bank held more than $70 billion in uninsured deposits. Those customers will be able to access all their funds now, even though the banks collapsed. This sends the message that customers have no reason to move their money, because they won’t lose it if their bank goes down.

The government also tried to ensure that most banks don’t get close to failing in the first place. So the Federal Reserve announced a new special lending facility with unusually generous terms: It will loan money to banks that put their assets up as collateral, even if those assets are worth less now than what the bank paid for them. Typically, the central bank only lends against the current value for a bank’s assets, according to Todd Phillips, who served as an attorney at FDIC. The move means banks shouldn’t have trouble getting access to cash if customers start withdrawing funds.

The federal government is not going to bring SVB or SBNY “back to life.” Executives at these banks will not keep their jobs. The money used to reimburse depositors will NOT come from taxpayers, but from the Deposit Insurance Fund that U.S. banks HAVE ALREADY BEEN PAYING INTO. 

A senior Treasury Department official, to me:

Silicon Valley Bank’s “equity and bondholders are being wiped out. They took a risk as owners of these securities. They will take the losses. What is being helped are the depositors.”

— David Gura (@davidgura) March 12, 2023

Caitlyn Kim and Sarah Mulholland have more for Colorado Public Radio:

President Joe Biden on Monday tried to reassure the public and calm the markets over the state of the banking system.

“Look, the bottom line is this: Americans can rest assured that our banking system is safe. Your deposits are safe,” he said…

…The Colorado Bankers Association is also trying to reassure people that the troubles aren’t likely to spread to regional banks here.

Instead of listening to Boebert, let’s go to someone who actually knows what she is talking about: Rep. Brittany Pettersen (D-Jefferson County), who sits on the House Financial Services Committee:

“Right now, it seems that any immediate threats to our financial system caused by the collapse of Silicon Valley Bank (SVB) and New York Signature Bank have been averted,” she said in a statement. “It’s important for people to understand that the actions of the FDIC, the Federal Reserve, and the Treasury Department will not use any taxpayer dollars, and cannot be considered a ‘bailout.’”

Pettersen said she wants to avoid situations like this in the future and joined a letter to key regulators “urging swift action to prevent broader bank failures.” Pettersen and her staff have been involved in multiple briefings with regulators about SVB since Friday. The Financial Services Committee will also be holding a members-only briefing Monday evening, according to a senior advisor with knowledge.

Boebert also had access to a briefing from the Biden administration and the Treasury department, but she came away with a very different understanding:

This doesn’t even make sense. But if it lets Boebert boo Biden, then she’s happy.

Boebert narrowly won re-election in 2022 by a 546-vote margin. She said then that it was time to “take the temperature down” in Washington D.C. and prove that Republicans can lead with “strength” and “grace.” That promise was forgotten by Christmas because Boebert doesn’t know any other way forward. She has no operating principle beyond “Biden and Democrats suck.” This is her shtick, and she leans in HARD at every opportunity.

But at some point — and this is one of those points — politicians need to set the rhetoric aside for the good of the country. Suppose Boebert’s anti-Biden screeching helped stoke a run on banks that set the country on the course toward another financial crisis like we saw in 2008? Don’t laugh — bad information often leads to bad decisions and worse outcomes.

Somebody in the GOP caucus needs to explain to Boebert that partisan hackery can eventually be dangerous for all Americans. Let’s just hope that conversation happens before Boebert breaks something that we can’t glue back together.