In the wake of the failures of Silicon Valley Bank and Signature Bank, Congress and President Biden are calling for stricter oversight and changes to the U.S. banking system. Biden also assured the American taxpayers that the funds used to pay the banks’ depositors “will come from the fees that banks pay into the Deposit Insurance Fund.” Straight Arrow News contributor Newt Gingrich isn’t convinced. He argues that the American taxpayer will end up bailing out billionaires who took “stupid risks” with their money.

If you watch carefully, the recent collapse of banks in New York and California is going to lead Liberals to say, “Oh, we need more bureaucracy, we need more government control.” That is candidly baloney.

The fact is, had the federal government and the regulators sitting in San Francisco looked carefully at the Silicon Valley Bank, they would have realized its entire model was nuts. This was not a bank. This was venture capital pretending to be a bank. It was an invitation waiting to collapse. And the fact is if the regulators in New York looked carefully at the scale of investment in cryptocurrency by the bank there, they would have intervened.

Now, ironically, the co-author of the most famous modern regulatory bill, Barney Frank, actually was involved as a member of the board of the New York bank which collapsed, which tells you, it isn’t more red tape, it isn’t more federal regulators, it isn’t more bureaucracy. When these banks fail to perform, they need to be closed. When they’re close to failing to perform, they have to be advised and sometimes their leadership has to be changed. But trying to cover up a government failure — and in both New York and California the government failed to exercise power it already had by claiming, “Oh, the answer to government failure is more government” — that makes no sense at all.

And the fact is we need to reestablish the principle that if you’re wealthy and you put your money in somewhere and it’s not insured, then the taxpayer should not bail you out. There’s no reason everyday working folks ought to be bailing out millionaires and billionaires because they took stupid risks. And that’s exactly what’s going to happen, particularly in the Silicon Valley Bank case.

So President Biden may proudly say nobody will lose a penny. The American taxpayers are the ones who ultimately are at risk of losing a lot of pennies, and it’s wrong.

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