President Joe Biden has stated that the FDIC’s swift action to safeguard Silicon Valley Bank account holders was not a bailout and emphasized that his administration is focused on safeguarding “American workers and small businesses.”
It’s unlikely, however, that everyday Americans will be the primary beneficiaries of the bailout because 93% of the bank’s depositors maintained over $250,000 in their accounts.
“The Fed doesn't step in and protect those people that have lost their houses due to the incompetence and bad investment strategies of the muckety mucks, it steps in and protects the muckety mucks.” – @JonStewart on SVB’s bailout, on the pod with @mcuban. https://t.co/vOzHWl3DV9 pic.twitter.com/9z6ZWD5Gzx
— The Problem With Jon Stewart (@TheProblem) March 16, 2023
Silicon Valley Bank was renowned for its list of tech industry clients, but it also welcomed deposits from a diverse range of individuals, some of whom had influence in pushing the Biden administration toward a bailout.
California Gov. Gavin Newsom (D) and his three wineries were clients of Silicon Valley Bank, and the governor himself had maintained personal accounts there for years, as per a report by The Intercept.
However, Newsom’s attempt to rescue SVB’s clients may have legal ramifications, as California law prohibits elected officials from interfering with official matters where they have a personal interest.
Governor Newsom played a significant role in persuading President Biden of the need for a bailout of Silicon Valley Bank. He was among the first politicians to praise the president for quickly taking action to provide relief to all of the bank’s clients.
Numerous prominent Democrats, including Governor Newsom, have received financial support from Silicon Valley Bank. Furthermore, employees of the bank have donated tens of thousands of dollars to Democratic causes and candidates.
BuzzFeed, a left-wing digital media firm, announced to its investors on Monday that it held $56 million in cash and cash equivalents, most of which was deposited in Silicon Valley Bank. This announcement marked the conclusion of a disappointing fiscal year for BuzzFeed, which faced a net loss of $201.3 million, a 40% reduction in its newsroom staff and a 90% decline in its stock price.
Vox Media, the parent company of numerous progressive news outlets, has revealed that it had banked with SVB. On Tuesday, Vox published an article ridiculing the notion that Silicon Valley Bank’s emphasis on progressive initiatives may have played a part in its collapse.
Black Lives Matter is not a confirmed client of SVB, but Silicon Valley Bank and its employees have donated more than $73 million to Black Lives Matter and related causes since 2020, according to the Claremont Institute’s database.
Had President Biden not intervened to protect SVB account holders, its collapse could have also dealt a devastating blow to the climate change sector and the 1,550 technology firms that specialize in solar, hydrogen and battery storage solutions that had held funds at the bank.
Despite the bailout, the collapse of Silicon Valley Bank will continue to have lasting consequences for the industry. Insiders have cautioned that the bank was frequently the sole institution willing to provide funding for climate change projects.
