Amid bank collapse, Kansas, Missouri senators criticize Biden for rescuing ‘woke’ banks

Amid the largest bank collapse in 15 years, Republican U.S. senators for Kansas and Missouri rebuked the Biden administration on Monday for protecting depositors at the failed Silicon Valley Bank and Signature Bank.

Republican Sens. Josh Hawley, Eric Schmitt and Roger Marshall portrayed SVB — with its tech-heavy customer base — as a “woke” bank, a criticism that appeared intended to funnel the crisis into a culture war context and sidestep calls for tighter regulation from Democrats.

Even as the lawmakers signaled they would oppose any “bailout” of banks, several regional banks came under strain Monday. Kansas City-based UMB Financial Corp.’s stock stumbled, but the bank said it was on solid footing.

Congress also faced scrutiny for scaling back financial regulations on mid-sized and community banks in 2018 under former President Donald Trump. The rollback affected standards that were put in place in 2009 following the financial crisis that spurred the Great Recession.

President Joe Biden on Monday said his administration would look into why the banks failed and pinned the blame on the 2018 rollback of regulations — which at the time was cited as an example of bipartisan dealmaking in the Senate and won the support of several Democrats, including then-Sen. Claire McCaskill.

“Unfortunately, the last administration rolled back some of these requirements,” Biden said. “I’m going to ask Congress and the banking regulators to strengthen the rules for banks to make it less likely that this kind of bank failure will happen again and to protect American jobs and small businesses.”

William Keeton, a finance professor at the University of Missouri-Kansas City, predicted lawmakers will debate reversing Congress’ decision to exclude smaller banks from strict stress testing requirements to ensure banks have enough capital to withstand economic shocks.

“Silicon Valley Bank was not being stress tested and I’d like to think if the Federal Reserve had been doing that they would have found that Silicon Valley Bank was taking on too much interest rate risk,” Keeton said.

The Treasury Department, Federal Reserve and Federal Deposit Insurance Corporation (FDIC) are using the deposit insurance fund to ensure that the depositors in SVB and Signature are made whole. The fund won’t be used to protect shareholders or senior management. But if it costs more to protect depositors than is currently in the deposit insurance fund, banks will have to pay fees to the fund.

Missouri Republicans rejected Biden’s assurances that taxpayer money wouldn’t be used to bail out the banks, when the money is coming from a bank insurance fund.

Schmitt wrote “too woke to fail” on Twitter before criticizing the method the Biden administration took to make sure that depositors at SVB and Signature Banks, which failed Sunday, had access to their money on Monday.

“Missouri community banks and by extension small businesses and individual taxpayers should not be bailing out woke SVB, San Francisco millionaires and even Chinese firms and investors through ‘special assessments,’” Schmitt wrote.

Hawley said he plans to propose a bill that would prevent banks from passing those fees onto customers and would prevent small banks from having to pay the fees at all.

“So these SVB guys spend all their time funding woke garbage (“climate change solutions”) rather than actual banking and now want a handout from taxpayers to save them,” Hawley wrote.

Lucas Kunce, a Democratic candidate who has already begun campaigning for Senate against Hawley in 2024, criticized the Missouri senator’s efforts to paint SVB as a woke bank.

“Three days after the biggest bank failure since 2008, and this is all we’re getting from Josh Hawley,” Kunce said. “Nothing about banks getting Congress to rewrite the rules. Nothing about reform or protecting Missourians. We need real banking reform now to protect Missourians from the corruption in our financial system that threatens our workers, our economy, and our national security.”

Among the current members of the Missouri and Kansas delegations who were in Congress in 2018, Rep. Emanuel Cleaver, a Kansas City Democrat, is the only one who voted against the bill lifting some of the Dodd-Frank restrictions.

Neither Hawley nor Schmitt were in Congress when those regulations were lifted.

However, Marshall and Sen. Jerry Moran, a Kansas Republican, voted to lift the regulations. Marshall was in the House at the time.

After Marshall questioned the precedent being set by the FDIC, a federal agency that insures deposits and supervises financial institutions, Sen. Chris Murphy, a Connecticut Democrat, said on Twitter it was a Republican super donor – Peter Thiel – who had invested in SVB and then withdrew millions right before the bank failed.

“Count me in for all the ‘woke means everything I don’t like or understand’ content. Tremendous,” Murphy wrote. “FYI it was a Republican super donor who backed the bank and then led the run that created the crisis. So maybe not everything is shirts/skins?”

Their focus on SVB’s investments wasn’t shared by all Republicans in Missouri’s delegation.

Rep. Ann Wagner, a St. Louis County Republican who serves on the House Committee on Financial Services, said her office was working with regulators, the Missouri Bankers Association, and local small and mid-sized banks to get a better understanding of the situation.

“I want to assure Missourians this is not a systemic issue and I have confidence in our banking and financial systems,” Wagner said. “Second District constituents need to know that Congress has no plans to use taxpayer dollars to bail out banks.”

Some of those mid-sized Missouri banks also spent Monday attempting to reassure customers that their deposits were safe. Kansas City-based UMB Financial Corp. saw its stock tumble fall by roughly 30% before recovering to close 15% lower on Monday.

While Kansas City-based Commerce Bank’s stock only fell 2.92% by the end of Monday, its president and CEO John Kemper put out an open letter to reassure customers that their money was safe.

“We recognize that market uncertainty can be concerning, and the recent closures of Silicon Valley Bank and Signature Bank by the FDIC and other US regulators are unfortunate and unsettling,” Kemper wrote. “During times like these, we want to remind you of the strength and stability of Commerce Bank.”

Cleaver, who serves on the House Committee for Financial Services, said he believed the Biden administration took the right steps to protect the banks, given how many people banked with the institutions.

Both SVB and Signature had more than $100 billion in assets, making them among the largest financial institutions in the country, but smaller than the banking giants that were bailed out in 2008.

Cleaver called for Congress to put measures in place that would prevent this type of failure from happening again.

“Americans are, and ought to be, frustrated with the situations at Silicon Valley Bank and Signature Bank—and I join with them in their strong disdain for reckless risk-taking on Wall Street,” Cleaver said. “However, as one of a handful of members on the Financial Services Committee who were around during the financial crisis in 2008, I can tell you that this was not the big bank meltdown of the early 2000s.”

UMB chairman, president and CEO Mariner Kemper said in a statement that the bank believes the issues affecting SVB and Signature are not “systemic” to the banking industry.

“UMB Financial Corporation (UMBF) continues to be in a strong position from a balance sheet, asset quality, liquidity, regulatory capital and interest rate positioning perspective,” Kemper said.

Star reporter Kevin Hardy contributed to this article.