Charles Payne trashes theory Trump deregulation caused latest bank collapse
FOX Business host Charles Payne sounds off on 'Life, Liberty & Levin' after blame flies around for Silicon Valley Bank's failure.
FOX Business host Charles Payne joined "Life, Liberty & Levin" to analyze the collapse of Silicon Valley Bank and the ensuing bailout of sorts from the Biden administration to its depositors via the FDIC.
Payne rejected the theory former President Donald Trump's actions toward slackening regulations to relieve pressure on community banks had anything to do with SVB's collapse.
He argued that instead it was an institution largely serving America's wealthiest investors that made unwise, long-term investment decisions in T-bonds and other instruments itself.
"The last big financial crisis we had, a lot of rules were put into place and they were onerous rules — they were just too strict," Payne said. "We do have banks for a reason. Banks, we want to lend money. Well, they were so rough and so onerous on small banks, they couldn't lend money."
"Why have a community bank if it can't lend money to the community?"
SVB (JustinSullivan/Getty)
Payne explained Trump recognized this problem and recommended Congress revise policy so that such regulations and rules only apply to banks holding more than $250 billion in deposits, which he noted also received generous bipartisan support at the time.
"So that has zero to do with what's going on right now — absolutely zero," he said. "It's another one of those major excuses."
The "genesis" of SVB's collapse instead starts with President Biden, according to Payne, who pointed out the trillions of dollars Biden printed and "showered on this economy, ostensibly to fight COVID — wink-wink."
The ensuing inflation became the purview of Chairman Jay Powell and the Federal Reserve, he said, adding that Powell has been trying to slow the economy to put out the inflationary fire.
Charles Payne (Fox)
"He's raising rates up, and as he does this, it changes the dynamics of the investing world," he said. "On the side, we've got… the ultimate elites on the West Coast. In fact, they have their own modern-day Roman Empire in Silicon Valley."
Payne argued they make so much money from the Federal Reserve's behavior combined with stimulus that they "went nuts and they took advantage of it in 2020."
"So now instead of $50 billion, [SVB] had almost $200 billion," he said. "What do they do with this money? They don't lend it out. They were never a bank to lend money. They're in the richest zip code in America. They start to invest, and they start to do really dumb things with this, including loading up on bonds that last year."
Payne noted the bond market had one of its worst years in history in 2021, which crushed the bank's balance sheets.
"On paper, they had losses, they couldn't meet their obligations, hence they were bailed out, not the bank. Technically, the bank was allowed to go out of business. Technically, Silicon Valley was bailed out again after ripping off the American public for the last 20 years with overvalued IPOs and so-called SPACs."
"So consequently, we've created now a banking crisis, and everyone's looking around to see who's next."
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