By Maggie Stalnecker
Throughout the past week, we have seen the shutdown of several large banks and their subsequent takeover by the federal government. At the time this article was written, both Silicon Valley Bank (SVB) and Signature Bank have been taken over by the Federal Deposit Insurance Corporation (FDIC), and this has created a troublesome outlook for the near future of both the stock and banking markets. Before the shutdown, SVB was the sixteenth largest bank in the United States, and Signature held nearly $110.36 billion in assets and $88.59 billion in deposits. This has created the second and third-largest bank failures in US history, respectively, and sent the financial markets into a tailspin.
As the fallout from this situation continues, criticism has arisen on both sides of the political aisle. Liberal politicians blamed the actions of former President Donald Trump, claiming that his deregulatory policies, especially his repeal of certain provisions of the Dodd-Frank Act, set the stage for this collapse. Meanwhile, conservative politicians and commentators have already pointed fingers at the supposedly “woke” bank boards they claim have become more focused on Environmental, Social, and Governance (ESG) investing and Diversity, Equity, and Inclusion (DEI) policies, rather than maintaining a capable board of directors.
The Wall Street Journal recently published an opinion by Andy Hessler headlined “Who Killed Silicon Valley Bank?” Mr. Hessler argued that one of the many reasons for the SVB failure was that its board has been too focused on DEI initiatives. Meanwhile, the extremely popular conservative Instagram personality Rogan O’Handley, who goes by “DC Draino,” flooded his page last Sunday and Monday with calls to “just let the woke banks fail”. At the same time, Fox News commentators like Tucker Carlson doubled down on the same argument, blaming wokeness and woke policies for the bank failures.
This was a big misstep in messaging from the right during a time when conservatives could have offered solutions, stepped in with leadership alternatives, or allowed the actions of the left to speak for itself. Instead, prominent figureheads on the right, including 2024 presidential hopefuls like Florida Gov. Ron DeSantis and Mr. Trump, chose to use this as an opportunity to point fingers and approach the situation with a smug attitude.
While it is true that the increasing focus on both ESG and DEI policies are unwise and inefficient ways to conduct business, and the actions of the banks, the government, and President Joe Biden should certainly not be praised or glorified, either, what ultimately led to the bank collapses was actually the result of gross mismanagement, complicated financial situations, and an incredible lack of risk management, combined with the current tumultuous state of the US economy. The insistence from conservatives to blame only “wokeness” for this disaster is highly embarrassing and insensitive, especially when the facts prove several other factors are primarily to blame.
As an accounting major, I believe that a primary focus on ESG investing is not only ignorant but is one of the factors leading us toward the social credit score system. I also believe that government bailouts should not be considered and that liberal politicians are too quick to offer government assistance when a crisis arises.
However, Republican leadership should have done a much better job managing its response to this crisis. Instead, the GOP did what is too often done in politics: pointed fingers and said “I told you so” when something happened while the “other side” was in charge. This could have been a major opportunity to rise above, take action, offer solutions, and be the party providing Americans–many confused and fearful–clear direction in a tumultuous time.
Something has to change in politics if we want our country to improve. We are a great nation that is currently caught in a downward spiral of name-calling and accusations. Conservatives have an opportunity to set themselves apart and have a chance at gaining power again in the next election cycle. But in order to do that, we have to be different and be the people standing up and acknowledging that there is a mess, while laying out a clear, feasible plan for success.
The conservative response to this situation was a missed opportunity to rise above and show what real leadership looks like in the face of a disastrous economic failure. Now is the time to take the lead and offer helpful solutions and goals, rather than lambast the left and the president every chance we get.
Ms. Stalnecker is a senior at Chapman University. She is majoring in accounting.