Cal Thomas: SVB not anyone's fault?

From the commentary: Government bailouts do not penalize bad management and lack of oversight, or risky investment strategies that caused the problem.

FILE PHOTO: Silicon Valley Bank location in San Francisco
FILE PHOTO: The Silicon Valley Bank branch office in downtown San Francisco, California, U.S., March 13, 2023
REUTERS/Kori Suzuki/File Photo

One of the benefits of being a Washington insider, from the president of the United States to the lowliest bureaucrat, is never having to admit your policies are wrong.

Cal Thomas commentary
Cal Thomas Commentary
Tribune graphic
Summary: I once heard the late evangelist Rev. Billy Graham say America was not at a crossroads, but had traveled down the wrong road and needed to come back to the crossroads and take the right road. What if we can no longer agree on the right road and where the wrong road is leading us?
Summary: Donald Trump would do well to withdraw from the field and allow younger and less controversial candidates to replace him. His record of policy successes while president are undeniable (except for those in denial), but his narcissistic personality contributed to his loss. It is also contributing to the work of the January 6 committee. If that committee wishes to "bring us together," it will forgo recommendations of criminal prosecution and let voters decide, as they should and ultimately will, the future of Donald Trump.
Summary: When rhetoric gets heated, perhaps the best way to be heard is to speak in a tone Scripture attributes to God — "a still, small voice." As noted by the writer of Proverbs: "A gentle answer turns away wrath, but a harsh word stirs up anger. (Proverbs 15:1)
Summary: Many viewers might want to know why Congress can't seem to fix any of the country's real problems. That perennial question is why increasing numbers of Americans have grown sour about Washington. They see members of Congress more interested in re-election, in their careers and in perks than in the people they are supposed to represent.

In the case of Silicon Valley Bank — the nation's 10th largest - the financial policy chickens of this, and previous administrations, have predictably come home to roost. Record debt, massive new spending, and the failure of regulators to see what was coming contributed to the run on SVB. It didn't help that in 2018 President Donald Trump signed the biggest rollback of Dodd-Frank bank regulations since the global financial crisis of 2008, loosening rules on all but the largest banks and "opening taxpayers to more liability if the financial system collapses," according to CNBC.

At first, Treasury Secretary Janet Yellin said there would be no bailout, but that quickly changed when the administration, which has been trying to convince us the economy is going swimmingly, likely began to consider the political implications of this and possibly other bank failures and threw a lifeline to the bank.

Naturally, President Biden is taking credit for saving the depositors' money. Even those with deposits over the limit of FDIC insurance will be saved. Biden is now claiming to be Mighty Mouse. He's come to save the day: "Thanks to the quick action of my administration over the past few days, Americans can have confidence that the banking system is safe. Your deposits will be there when you need them."

A Wall Street Journal editorial has it right: "You can't run the most reckless monetary and fiscal experiment in history without the bill eventually coming due. The first invoice arrived as inflation. The second has come as a financial panic with economic damage that may not end with Silicon Valley Bank."


Indeed. At least 20 regional banks were hit with trading halts on Monday.

Even after the Trump bank regulation rollbacks, why didn't bank regulators see this coming? If they did, why didn't they do something to keep it from happening? That's the flip side of not wanting to admit error. Insiders fear that by acting they might get blamed if it doesn't work.

The Federal Reserve Board defines the primary purpose of the agency: "The Federal Reserve is responsible for supervising — monitoring, inspecting, and examining — certain financial institutions to ensure that they comply with rules and regulations, and that they operate in a safe and sound manner. Supervision of financial institutions is tailored based on the size and complexity of the institution."

It appears this did not happen. Congress should invite those responsible to testify why nothing was done.

Financial adviser Ric Edelman emails to say he is glad regulators stepped in. The alternative, he says, would be, "Thousands of companies ... out of business, millions out of work, and billions lost. Tech innovation would have been lost for a decade and there'd be a global recession a la 2008." Even so, says Edelman, "The bank blew it, and the banking regulators blew it - in other words, same old story."

Why must it be the same old story? Doesn't even recent history instruct us as to what happens when we ignore common financial sense?

The financial crisis of 2007-2008, also known as the subprime mortgage crisis, resulted from bad financial decisions, mostly the lending of money to people who couldn't pay it back. It led to the Great Recession that began in 2007, lasted two years and was the worst economic downturn since the Great Depression.

Government bailouts do not penalize bad management and lack of oversight, or risky investment strategies that caused the problem.


More Commentary:
From the commentary: Mexico is not our enemy. It's a friend, ally, trading partner and good neighbor. In fact, Americans don't realize how lucky we are that — unlike many other countries around the globe — we don't have a hostile country on our border.
From the commentary: If Stormy Daniels were all he had to worry about, Donald Trump would be in better shape than he is. Stay tuned.
From the commentary: Increasing the deposit insurance cap and focusing on small business transaction accounts could stabilize midsize banks, reduce more deposit transfers out of those institutions, and shore up confidence in the banking system. If there is enough support in Congress, the Biden administration should submit a request for rapid approval.

On the heels of SVB's collapse came word that Signature Bank in New York, which recently made a play to win cryptocurrency deposits, abruptly closed and was placed into receivership. Signature held more than $110 billion in assets and some of the largest stakes among banks in the cryptocurrency industry. In perhaps the ultimate irony, Barney Frank is a board member.

At a time when retirees and others are seeing their stock market investments decline and polls showing there is dismay about the country's financial future, Congress has an obligation to step in and hold accountable the policies and the people responsible for the SVB collapse and prevent new ones from occurring.

This Cal Thomas commentary is his opinion. He can be reached at

Commentary logo
Commentary logo
Tribune graphic

What To Read Next
Get Local