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GOP Rep. Kustoff Demands to Know Why Regulators ‘Failed to Catch’ SVB Collapse

On Saturday, Republican Rep. David Kustoff appeared on Fox News Channel’s “Fox News Live” and demanded to know why regulators failed to catch the massive collapse of Silicon Valley Bank (SVB). He noted that while the bank was poorly managed and had issues, that the collapse is likely a partial reflection of “the general state of the economy.”

He argued, “We need to also know where the regulators were, what they were concentrating on, and why they failed to catch this before the events of the last several days.”

Kustoff declared that there was “poor management by the bank and bank executives. But I think what separates this failure from what we saw…in 2008, there are some really — some unique and distinct issues as relates to the bank, certainly the tech-heavy companies and deposits in Silicon Valley. So, that separates that from the 2008 failures. The fact of the matter is though, we’ve got to consider that the economy — this may be, in part, reflective [of] the general state of the economy, which, I think, most people in my district do not think is as rosy as the Biden administration portrays. We need to also know where the regulators were, what they were concentrating on, and why they failed to catch this before the events of the last several days.”

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SVB collapsed on Friday, making it the second largest bank failure in the United States.

On Sunday, Treasury Secretary Janet Yellen asserted that there will be no federal bailout for the bank.

Yahoo reports:

joint statement from Yellen, Fed chief Jerome Powell and FDIC chair Martin Gruenberg said depositors will have access to all of their money today from Silicon Valley Bank. The same goes for Signature Bank, which was closed on Sunday. No losses will be borne by the taxpayer. Any losses to the Deposit Insurance Fund to make uninsured depositors whole will be recouped by a special assessment on banks, the statement said.

Shareholders in these banks will not be protected. Senior management has been removed.

The Fed added it will make available additional funding to eligible depository institutions to help assure they can meet depositor needs.

Wall Streeters are likely still to brace for more contagion despite the extraordinary measures, while at the same time trying to convey messages this is not Lehman Brothers circa 2008/2009.

A long-time fund manager told Yahoo Finance, “Yes there are a couple other banks that have some tech concentration that pose some risk, but SVB was extreme in its courting of large accounts and perks. And they will try to tell you this is a risk to the entire system but it isn’t. The big banks are incredibly well capitalized and the market even told you that on Friday with JP Morgan, Citi, Bank of America and Wells Fargo all having uneventful days in the market. This will be a one (or possibly two)-off situation where a bank made a mistake with buying longer term mortgages to push for yield and with a concentrated deposit base that was incredibly loyal until they were not.”




2 Responses

  1. The reason they didnt catch it is because we have a incompetent president and Democrat party. And that is a fact.

  2. Why post here you just take it off anyway. You must be a liberal news media. I am going to block you from now on.

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