The collapse of Silicon Valley Bank and two other large banks is fueling economic insecurity and angst among an already rattled American public and is prompting a major damage control effort by President Joe Biden.
Throw in Republicans’ threats to raise the retirement age and cut Social Security and Medicare and you have a recipe for a very nervous electorate to go to the polls next year.
Biden and Democrats like Sen. Elizabeth Warren are already scurrying to assure nervous Americans the bank system is “safe” and avoid blame for the bank collapses, saying they were due to lax regulatory policies under Donald Trump.
Blame Trump is usually the Democrats’ answer for every problem.
But Biden himself is now taking heat for the banking collapses.
“The bottom line is this: Americans can rest assured that our banking system is safe. Your deposits are safe,” Biden said.
That promise is unlikely to assuage the public, which is already dealing with rampant inflation, rising mortgage interest rates and now financial instability in the banking industry. The banking collapses could not come at a worse time for Biden, who is expected to announce soon that he’s running for reelection.
The Federal Reserve is investigating SVB’s failure even though skyrocketing interest rates approved by the Fed to protect Biden from getting blamed for inflation are now playing a role in Americans’ growing economic insecurity. The Fed had been expected to raise rates again but now is unlikely to do that given the banking collapses.
In addition to the SVB collapse, the federal government over the weekend announced the failure of New York-based Signature Bank, where one of the board of directors is former Massachusetts Congressman Barney Frank.
“Mr. Frank’s extensive experience as a Congressman, and particularly as chair of the House Financial Services Committee, led the board to conclude that he should be a member of the board,” according to a statement about Frank’s appointment by the bank.
The liberal icon got more than $121,000 in compensation for being on the board last year, as well as $180,000 in stocks, according to a company filing.
Now Frank is insisting that Signature could have stayed open if not for overly aggressive tactics by the government.
In an interview with Bloomberg, Frank blamed crypto for “destabilizing” the financial system — even though under his and the board’s guidance Signature relied on crypto as a growth vehicle.
The “bottom line” — Biden likes to say — is that Americans have no more trust in the government’s ability to keep their money safe and keep a major recession from developing.
Voters will be going to the polls in 2024 nervous about their financial futures — and now even staples like Social Security and Medicare.
Republicans like presidential candidate Nikki Haley are floating plans to tamper with Social Security and raise the retirement age — the so-called “third rail” of American politics.
Biden has attempted to capitalize on those plans by scaring voters but has no plan to keep Social Security solvent over the next few decades.
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