Partisan banter distracts from economic despair signs

In the wake of the second largest bank failure in United States history, no one seems to acknowledge the elephant in the room — an ominous sign of economic recession. The last time a bank of this caliber collapsed was in the wake of the 2008 financial crisis. Then, it was Washington Mutual. After WaMu collapsed, 500 other banks followed in their footsteps. 

This time, it was Silicon Valley Bank. With $209 billion in assets, and only $250,000 federally insured for each customer, many small businesses are bound to lose money. Other banks will surely deal with the repercussions. Learning from our mistakes is critical; history tends to repeat itself. 

A cataclysmic event like this would typically raise concern for the health of the economy and the banking world at large. When a similar event happened 15 years ago, it was symptomatic of a much larger problem. Yet, no one seems to be taking this theory seriously. This wishful thinking is dangerous. Small businesses and families must brace themselves for possible economic turmoil if SVB is not an isolated incident.

Mainstream political pundits may not acknowledge the possibility of economic turmoil, but that does not mean they refuse to discuss this issue. Prominent figures on both the left and the right find ways to spin this narrative to advance their political agendas. Tucker Carlson took to his platform to paint SVB as a “woke” bank. He blamed their failure on mismanagement and incompetence. According to Carlson, the organization’s emphasis on diversity came at the expense of properly running a bank. In other words, Carlson used the bank’s association with a left-wing geographic region and pro-diversity policies to advance his political agenda.

While the right framed this story to fit their narrative, many Democrats have done the same. President Biden recently claimed that Silicon Valley Bank’s failure calls for increased banking restrictions. Biden called for an expansion of the Dodd-Frank banking restrictions that were signed into law during the Obama administration. The problem is, Dodd-Frank is one of the most controversial bills from the Obama era. In essence, Dodd-Frank imposed numerous restrictions and government regulations on the banking industry.

Whether this bill was successful depends on who you speak with and what side of the political spectrum they land on. On the one hand, some agree that the bill may have provided protections for banks, but the economic effects were minute. The point is that Biden’s push for an expansion of Dodd-Frank laws is not an honest attempt at protecting the economy. Biden is acting as an opportunist, using SVB as a chance to pursue Obama-Biden initiatives further. 

If you are interested in a career in banking, the Silicon Valley Bank failure should be most alarming. If history repeats, this bank failure will spur a domino effect of losses among smaller banks. We could be witnessing early signs of an impending financial crisis. Perhaps more alarming is our leaders’ inability to focus on the real issue. Politics is getting in the way of problem-solving. 

One of two things must be true. SVB’s failure was either an isolated instance of poor administration or a sign of a more severe economic problem. Republicans argue that the bank’s failure was caused by woke, incompetent management. This is clearly a political narrative; political leanings do not determine whether banks succeed or fail. Democrats dispute this Republican claim but also insist that this was a singular event, not an indication of a deteriorating economy. This reasoning is flawed; it implies that the bank’s failure was not an isolated incident if management is not to blame. Democrats refuse to recognize the more important economic crisis but do not blame the administration.

Politicians do not want to address the looming economic threat because it is inconvenient. They do not want to address the repercussions of decades of irresponsible fiscal policy. Republicans and Democrats would rather spin political narratives than work to solve a problem that could affect all of us. If you want to pursue a career in banking, you should be most concerned. Even if you are not interested in banking, the impending financial crisis could be drastic enough to impact all of us profoundly.