The sinking of Silicon Valley Bank revives the early days of California’s 2024 US Senate contest

With a mirror slightly askew in the background, MP Katie Porter sat in her bedroom in Irvine, switching live to Instagram as several regional banks faced collapse and depositors desperately tried to withdraw money from their accounts.

Porter walked her followers through the basics of how banks manage customer money, why Silicon Valley Bank closed, and how the local bank in her Iowa farm town experienced a similar form of instability as a child.

She also castigated Republicans and some of their Democrats for voting in 2018 to repeal certain regulations and oversights under the Dodd-Frank Wall Street Reform and Consumer Protection Act, which Congress passed more than a decade ago in the wake of the financial crisis.

“See, Republicans weren’t listening and a lot of Democrats weren’t listening,” Porter said in a video that has had about 26,000 views. “That’s crazy.”

The second-largest bank shutdown in US history was a clear moment for Porter, whose campaign to replace Senator Dianne Feinstein has so far been permeated with themes of economic fairness and how these downturns disproportionately hurt low-income people.

Still, it’s doubtful that last week’s events will become a crucial issue in California’s 2024 US Senate race. Her two main opponents, Democrats Barbara Lee of Oakland and Adam Schiff of Burbank, voted against the 2018 rollbacks. Porter was not yet in the House of Representatives but vocally opposed them during her first congressional campaign that same year.

For his part, Schiff supported the original passage of Dodd-Frank and told The Times in 2014 that it would be a mistake to remove this oversight of banks. This week he, along with Sen. Richard Blumenthal (D-Connecticut), introduced a bill that, if passed, would seek to reclaim bonuses and stock sales from bank executives in the two months before a bank failed. It would also impose a 90% tax on the bonuses of bank executives who made $250,000 or more in the year their bank was acquired by the Federal Deposit Insurance Corporation.

Also ship’s office Posted a letter to several regulators and the Justice Department asking them to investigate Goldman Sachs’ role in the sinking of the Silicon Valley bank. It was signed by 19 other members of the state delegation – including Lee but not Porter.

“This combination of poor oversight and greedy management by the bank proved disastrous,” Schiff said in a fundraiser emailed Wednesday.

After the collapse of the Northern California bank, Lee related this bank run to her personal history of receiving public support and her support for poverty alleviation programs. She said the Biden administration’s decisive action to bail out the bank’s depositors averted disaster, adding that moments of economic uncertainty like this resonate with voters.

“Their jobs could have been on the line,” Lee said of employees at the bank and the startups whose assets she owned. “This is a very important issue for voters. We know it is the shareholders and CEOs who have mismanaged these banks that need to be held accountable.”

Rep. Barbara Lee speaks in Washington.

(Bloomberg/Bloomberg via Getty Images)

Still, the collapse of the SVB and the rescue of the First Republic have made clear how the financially precarious state of American life will be a key issue in the Senate race – with each candidate striving to convey to voters how he can be a staunch financial watchdog would .

“Politicians are more aware that people at all ends of the political spectrum are living lives of economic scarcity and injustice,” said entrepreneur and anti-poverty activist Joe Sandberg, who supports a 2024 ballot measure to raise California’s minimum wage. “In America, it’s common to live paycheck to paycheck. What is unusual is financial security.”

The bank’s recent failure was followed by the Biden administration, which said it would ensure depositors received all their money, even amounts above the Federal Deposit Insurance Corp’s normal limit. from $250,000. Signature Bank also failed and several others said they were in trouble. Race candidates and spectators said the economic plight of the middle class will be a major issue for voters across the state.

“I think Katie Porter has very strong messages about the ruthlessness of financial institutions and the totally unequal distribution of power,” said former Obama communications adviser Bill Burton.

“As far as it’s an issue in this campaign cycle, I think it’s too early to be honest. And while Adam Schiff hasn’t made a name for himself on those issues, I don’t think he’s having too much trouble finding a path to credibility.”

On Tuesday, Porter introduced a bill alongside Sen. Elizabeth Warren – who she recently backed – that would repeal a key part of the 2018 rollback of the Dodd-Frank banking bills. If passed, banks with assets of $50 billion or more would have to conduct more regular checks on whether they have sufficient cash to absorb losses during a market downturn and meet stricter capital requirements.

That threshold is currently $250 billion; Silicon Valley Bank’s assets under management were $213 billion.

Porter, a law professor at UC Irvine before he was elected to Congress, took a not-so-subtle jab at sea in an interview with The Times, suggesting that his opposition to the 2018 legislation had more to do with his struggles with Trump than had to do with a deep believed that the rollback was wrong.

“He wanted to be the Trump antagonist and in many ways he was,” she said, showing her willingness to attack a rival early in the campaign. “It was a vote against Trump. If you look at who else voted for it…it’s a lot of people who were in his circle of political influence.”

Rep. Adam Schiff speaks with a reporter as he walks down the steps of the US Capitol.

Rep. Adam Schiff speaks with a reporter as he walks down the steps of the US Capitol.

(Kent Nishimura/Los Angeles Times)

A Schiff campaign spokesman said Porter’s “false negative attacks on Adam will only increase support for him among voters interested in advances in homelessness, public safety and the economy, not mud fights.”

Burbank’s longtime congressman is best known for his recent work on the Intelligence Committee and his central role in the impeachment trial of former President Trump.

The former prosecutor seems aware that he needs to go beyond his opposition to Trump and address the rising cost of living in a state where homeownership is increasingly unattainable and homelessness is rampant. A recent survey by the Public Policy Institute of California found that 55% of respondents were worried about not being able to pay their rent or mortgage next month.

For Schiff, the SVB’s failure is related to an inherent injustice in the economy that “works with bank managers who take excessive risks with other people’s money.”

“I’ve been so focused on democracy lately,” Schiff said in an interview this week after attending a homeless charity in his district.

“The economic issues and the democratic issues are really part of the same pole. When things aren’t working out, when people see their quality of life falling below the future of their parents or their children, they start to be more open to a demagogue who comes along and says he alone can fix things.”

Latest poll from The Times found that Schiff has the support of 22% of registered voters, with 20% supporting Porter and 6% supporting Lee. The rest opted for other candidates or were undecided. So far, no well-known Republican has entered the race.

On the UC Davis campus this week, Porter stood in front of about 75 eager college students in a crowded classroom in front of a whiteboard — her signature prop during congressional hearings.

The bank collapse was hardly mentioned, the questions focused more on women’s reproductive rights, environmental issues and the labor movement. Still, Porter quickly returned to her Congressional experience and love of regulatory hearings, where she peppered bank and drug executives with difficult questions.

Freshman Jack Jacobs listened intently, trying to decide who to work for this election season. He had also attended the ship event at the university, which he said had a larger turnout and was held in an auditorium. Environmental issues were a priority for him, but trying to make the economy fairer through improved housing policies was also important.

“I’m looking for someone who will be more liberal. I definitely don’t want a person who is so moderate who will be someone else [Sen.] Kirsten Sinema or [Sen.] Joe Manchin,” he said, referring to two Democratic senators who recently opposed their party over voting rights and environmental laws.

In Arizona, Sinema, the newly minted independent, is now being challenged on the left by Rep. Ruben Gallego, who this week slammed her for reversing regulations, saying, “When bank lobbyists asked me to weaken bank regulations, I said no. When they asked Sen. Sinema, she asked how much — and voted yes. Now we will all pay for their mistake.”

Like Gallego, Porter has highlighted how her opponents have taken money from corporate political action committees and sees the focus on capitalism’s rich and rich as a major issue.

“It all comes down to the fact that people feel like there are two sets of rules for the economy,” she said. “The rules for the people at the top, and then the rest of us.”

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