A food delivery worker enters Silicon Valley Bank in Santa Clara, Calif., Friday, March 10, 2023. InternationalIndiaAfricaWASHINGTON (Sputnik) – US President Joe Biden’s economic policies are to blame for the closing of Silicon Valley Bank (SVB) and congressionally-approved bailouts may be considered in the future if other failing American banks need to be rescued amid the fallout, Republican Congressman Paul Gosar told Sputnik on Thursday.On Friday, Californian regulators shut down SVB, which became the largest US bank to collapse since the 2008 financial crisis. SVB’s collapse is believed to be linked to the increase in interest rates by the Federal Reserve System, which caused the impairment of assets on the balance sheets of many financial institutions, and to poor risk management. Two days later, on Sunday, authorities closed New York-based Signature Bank because of systemic risks, which was the third largest bank failure in US history.
"Biden’s economic policies created the conditions that lead to SVB’s large losses and eventually the bank run," Gosar said in a statement. "SVB invested a large portion of its deposits in mortgage backed securities and Treasury bonds."
"When interest rates were low, thanks in large part to President Trump, it seemed like a sound investment. However, when Bidenflation started to run out of control it forced the Fed to raise interest rates. As interest rates rose, the value of SVB’s mortgage backed securities and Treasury bond holdings fell drastically."
Treasury Secretary Janet Yellen also previously mentioned that rising interest rates from the Federal Reserve to combat inflation have been the core issue for Silicon Valley Bank’s failure.Gosar pointed out that many of the start up investments that were deposited in SVB evaporated following a decline in the tech industry.Although the Treasury Department appears to have taken emergency actions to shore up the US banking industry, Gosar said he is very leery of any future congressionally-approved bailouts that may be considered to rescue millionaire bank CEOs who have profited wildly while mismanaging their banks.AmericasSen. Warren Pins Blame for Bank Collapses on Congress for ‘Weakening Financial Rules’13 March, 18:15 GMTBiden has promised the US government would take action against reckless risk taking by financial firms. Biden said the Federal Deposit Insurance Corporation protection for depositors at the SVB and Signature banks will not be extended to investors and the management at the collapsed banks.