Former private equity titan and current Republican Senator Mitt Romney knows banking and borrowing better than most DC lawmakers. And Romney is voicing a strong opinion about who should lose out and who should be rescued after the shockingly swift failure of Silicon Valley Bank.
The Senator says “depositors in good faith” at SVB “should recover and have access to their deposits in order to meet their payrolls, pay their suppliers, and to prevent contagion.”
Silicon Valley Bank’s shareholders and executives lose it all, as they should. Depositors in good faith, however, should recover and have access to their deposits in order to meet their payrolls, pay their suppliers, and to prevent contagion.
— Mitt Romney (@MittRomney) March 11, 2023
Those depositors include thousands of companies whose SVB balances exceeded FDIC-protected limits. If these companies, innocent of mismanagement or wrongdoing, were to lose their ability to operate with expected liquidity, the result could have a “contagion” effect on the economy.
But recovery should reach no farther, according to Romney, who states clearly that any government-backed relief should not extend to SVB executives and shareholders. Romney says unambiguously: “Silicon Valley Bank’s shareholders and executives lose it all, as they should.”
[Note: Romney’s career in private equity, where the companies he acquired routinely assumed huge bank-issued debt loads as part of the initial transactions, gives him an unique perspective on what happened at SVB.]
Romney’s Silicon Valley Bank sentiments seem to match those of billionaire Mark Cuban, who tweeted: “The tragedy of SVB is that its not the wealthy taking the hit. It’s the thousands of companies who borrowed from SVB and were required to keep their cash in SVB. Those entrepreneurs and their employees and vendors are feeling the pain.”
The tragedy of SVB is that its not the wealthy taking the hit. It's the thousands of companies who borrowed from SVB and were required to keep their cash in SVB. Those entrepreneurs and their employees and vendors are feeling the pain. And they are who the Fed should protect
— Mark Cuban (@mcuban) March 11, 2023
Cuban retweets the story of an entrepreneur in Ohio — a mother of four who says she drives a used Honda Odyssey — to illustrate the kind of “depositor in good faith” that Romney references.
Hi, I’m Lindsey. A bit about me:
— Lindsey Michaelides (@lcmichaelides) March 11, 2023
– Ohio mother of 4
– I employ a team of 15 as a start-up founder & CEO of Strongsuit
– drive a used Honda Odessey
– husband works in manufacturing
– The financial future of my company, team and family are at risk w/ the collapse of SVB (1/23)
