Republican Senator Tim Scott from South Carolina appeared on “Sunday Night in America” with Trey Gowdy to address the recent collapse of Silicon Valley Bank (SVB) in California and the role of regulators in preventing such failures.
Scott criticized the regulators, stating that they were “asleep at the wheel” and did not take timely action to prevent the bank’s collapse.
Following the incident, the Secretary of the Treasury Janet Yellen, Federal Reserve Board Chair Jerome Powell, and FDIC Chairman Martin Gruenberg issued a joint statement announcing “decisive actions” to guarantee all deposits, including uninsured funds, in order to restore public confidence in the banking system and ensure its vital role in promoting strong economic growth.
Scott expressed concern over the Biden administration’s decision to insure all deposits, even those exceeding the $250,000 limit, citing potential corporate cronyism and negative effects on the marketplace.
He stated that this decision would allow the most sophisticated investors to have insulation from the federal government, which is problematic.
Furthermore, Scott claimed that high inflation was the root cause of SVB’s collapse, as it led to high-interest rates and caused more depositors to leave the bank than anticipated, ultimately resulting in its failure.
He criticized the Fed, regulators, and management of the bank for their failure and emphasized that taxpayers should not be held accountable for the bank’s collapse.
Overall, the collapse of SVB highlights the need for stronger regulatory measures to prevent such incidents in the future.
It also raises questions about the role of government in protecting the banking system and promoting economic growth.
Republicans such as Senator Scott are pushing for measures that prioritize individual responsibility and accountability, while also ensuring that the government does not overstep its boundaries and interfere with the free market.