'Rewarding bad behavior': Vivek Ramaswamy rips bailout of imprudent SVB tech clientele
"Would Biden have bailed out the uninsured depositors of a no-name oil-&-gas bank in Oklahoma?" wrote the entrepreneur and GOP presidential hopeful. "Absolutely not. This is Silicon Valley tech cronyism in its ugliest form."
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Businessman and 2024 GOP presidential candidate Vivek Ramaswamy decried the Biden administration's full guarantee of Silicon Valley Bank deposits as "tech cronyism" on Tuesday.
"Would Biden have bailed out the uninsured depositors of a no-name oil-&-gas bank in Oklahoma?" Ramaswamy wrote on Twitter. "Absolutely not. This is Silicon Valley tech cronyism in its ugliest form."
Ramaswamy deplored the perverse incentives created by the guarantee of uninsured deposits.
"One of the things that we're doing here," he wrote, "is rewarding bad behavior by saying 'even though you didn't do your due diligence, even though you weren't exercising basic financial discipline, we're still going to reward that anyway.' It's a problem."
President Biden has said taxpayers won't have to pay for the SVB and Signature Bank failures because the money will come out of FDIC insurance.
Ramaswamy dismissed that claim. "Taxpayers are indeed on the hook, just indirectly," he wrote in response to a Twitter user on Tuesday. "The moral hazard problem here is this: countless tech firms flush with cash [put] way too much $$ in SVB partly in return for special treatment for their founders.
"We now incentivize more of that bad behavior. If this were a midsize bank for the oil-and-gas depositors in Oklahoma, they wouldn't have been treated the same. And the Silicon Valley crowd wouldn't have said a peep in favor of it."
Just the News reported on Monday the FDIC's cash on hand is far lower than the combined amount of deposits at the two financial institutions.
Ramaswamy said the latest bank failures are not the same as the 2008 financial crisis.
"But it's still a bad example of cronyism, full stop," he wrote on Twitter. "Venture investors could've just put more $$ in those same startups but didn't want to. So they advocated for a bailout instead — not of SVB, but of tech itself."
2024 Republican presidential hopeful Nikki Haley shared a similar view on the bank failures.
“Joe Biden is pretending this isn’t a bailout. It is,” she said. “Now depositors at healthy banks are forced to subsidize Silicon Valley Bank’s mismanagement. When the Deposit Insurance Fund runs dry, all bank customers are on the hook. That’s a public bailout.”