Biden administration officials announced Sunday night they were taking control of two banks, Silicon Valley Bank and Signature Bank, and guaranteeing all of their deposits, even those far above the FDIC $250,000 limit. It is a decision that critics say smacks of special treatment for the Wall Street and Silicon Valley elites, many of whom are financial backers of the Democratic Party.

NHJournal caught up with Vivek Ramaswamy soon after the news broke to talk about the Biden administration’s decision. Ramaswamy became a multimillionaire as the founder of a biotech company and now operates Strive Asset Management. He’s also a Republican candidate for president of the United States.


NHJOURNAL: Vivek, what’s the big picture for you when it comes to what’s happening with Silicon Valley Bank?

VIVEK RAMASWAMY: Crony capitalism is the big picture for me. I think everyone has to play by the same set of rules, but that is not how it works in America today.

I’ll just go through what happened. Silicon Valley Bank made some irresponsible decisions as to how it invested its deposits. A number of startups made irresponsible decisions, tech startups put too much money into Silicon Valley Bank.

Silicon Valley Bank then failed against conditions of rapidly rising interest rates, which were bad both for their depositors as well as bad for the actual securities that they held. So, it was a double whammy that resulted in a failure.

Now, here’s the reality: For years, they lobbied for a lower level of capital requirements and regulatory constraints because, they insisted, they were not a ‘systemically important’ bank. And yet, in their hour of need, what do they claim?

They claim they need a bailout at the public fisc, because they might create systemic risk. And I think that’s a shame.  If you want to stop a bank run across the rest of the country, there are ways to do that other than actually stepping in to save the depositors of Silicon Valley Bank.

And here’s another dirty little secret: Many of those tech startups depositing at Silicon Valley Bank, they got private benefits like venture debt from the bank.

NHJ: What is venture debt?

VR: Silicon Valley Bank is among the very few institutions that actually provided venture debt. They would give you money, but it wouldn’t dilute your ownership in the company. It’s a form of debt. But most founders of startups can’t get that kind of debt from a more traditional bank, because a normal bank would never lend like that to a startup. Venture debt allows a venture capitalist and a startup founder to own more equity. So if it becomes a big success, they make even more money.

But here’s the thing: Taxpayers don’t get to participate in that. And so, why are they [the Biden administration] using taxpayer funds to subsidize these banks?

Now what they’ll say is they’re not using taxpayer funds because they’re just using the FDIC, deposit insurance that’s paid by banks, and as a technical matter, as a PR matter, they’re right.

NHJ: So, this isn’t a bailout?

VR: I think they did a great job of making this a ‘backstop’ story rather than a taxpayer bailout. But functionally, there’s no free lunch. Because of this action, our reserve is that much less well utilized than it should have been. And then there are the rules of the road. It’s a $250,000 maximum. If you don’t like the rules, great. Change the rules. I actually would’ve favored increasing that cap, but I would’ve done it prospectively, not retroactively after the fact when you’re picking your darlings as favorites.

And that’s why I say this is crony capitalism.

NHJ: You’re the author of ‘Woke, Inc.’ Did ‘woke’ politics play a role in this deal?

VR: “You know what’s funny about Silicon Valley Bank is that, just a year ago, they were making a $5 billion commitment to sustainable finance in green operations they said would contribute to a healthier planet. Hey – how about a healthier balance sheet?

I posted about this on social media, and some people were laughing about it. But it’s not a laughing matter because here’s the dirty little secret to the game. It works. If you virtue signal that you’re one of the ‘good guys,’ you get saved in the end. And that’s exactly what happened in this story.

NHJ: What’s been the reaction to your take on the SBV story?

VR: I lost a lot of friends this weekend based on my advocacy for this — probably donors and supporters, too. It’s the sanctimonious nature of their attitude that bothered me. I’m going to read you a text message from someone, I’m not going to tell you his name, but he’s a good guy.

‘I think you missed an opportunity with Silicon Valley Bank. You could be a different kind of conservative. Punish the managers and the shareholders, but not the depositors,’ he says, talking about the tech companies and the startups. ‘They are the engine behind American supremacy in innovation relative to other countries.’

And you know, it’s that level of self-importance, to believe that you’re so important, you need your own set of rules. I’d love to send that text around East Palestine (Ohio) and see how they feel about it.

Because that’s where populism comes from. Different sets of rules for different types of people. And that’s been on full display in this story.