March 22, 2023
AFP Fact Check recently published an article featuring Mark Williams, Master Lecturer of Finance, discussing false claims about bank failures under the Trump Administration related to the Silicon Valley Bank collapse.
After the collapse of Silicon Valley Bank (SVB) this March, critics of President Joe Biden claimed no financial institution failed during the Trump administration. The Federal Deposit Insurance Corporation (FDIC) did report 16 bank failures during the Trump Administration, contrary to claims shared online. SVB’s failure was primarily due to interest rate hikes that left it badly placed after investing heavily in bonds during the pandemic. The hole in the company’s balance sheet precipitated a run on the bank by its customers.
The total asset size of the 16 banks that failed during the Trump Administration (2017-2020) was relatively small, totaling $7.2 billion. The failure of SVB, the sixteenth largest U.S. bank with $211.8 billion in assets, triggered by a bank run, resulted in the second largest collapse in U.S. history. Williams states, “The size and speed of the SVB collapse, including concern over the transmission of systemic risk (contagion) to the broader financial industry, has sparked a movement by the Biden Administration to tighten regulation to reduce banks from engaging in excessively risky behavior.”