FDIC taps investment bank to lead Silicon Valley Bank sale

The FDIC has brought in the investment bank Piper Sandler to auction off Silicon Valley Bank, kicking off a high stakes sales process for the collapsed lender, according to two market sources who were granted anonymity to discuss the sale.

Lawmakers have been pressuring federal officials to outline their long-term plans for the defunct bank since it was shut down by California officials on Friday.

The FDIC declined bids submitted by other financial institutions in a separate auction held over the weekend, according to four lawmakers who’ve been briefed on the matter, a decision that has frustrated some Congress members who would’ve preferred to see Silicon Valley Bank acquired.

“I think it's deeply concerning,” Sen. Bill Hagerty (R-Tenn.) said in an interview late Tuesday. “The notion that they're going to do better as this asset turns into a carcass? … It's hard for me to understand how that’s the best answer.”

The FDIC declined comment. Piper Sandler did not immediately respond to a request for comment.

Banking regulators and Biden officials ultimately determined that emergency measures to backstop the bank’s uninsured depositors — which included roughly half of all Silicon Valley-backed businesses — would provide more clarity and calm amid fears of a possible financial contagion.

Signature Bank, a New York institution that had been a key banking partner to major crypto businesses, was also shuttered by regulators on Sunday.

The credit ratings agency Fitch Ratings on Wednesday downgraded First Republic, another lender whose shares have been battered in the days since SVB went under. The ratings agency also warned that the regional banking crisis could spill over into the broader market, including insurance businesses and investment funds.

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In the mob's eyeline: A senior Republican's close brush revealed in new Jan. 6 footage

Newly released video of the Capitol attack shows just how close rioters came to a senior GOP senator who was third in line for the presidency on Jan. 6, 2021.

The footage, released after media requests to access videos used in connection with a Jan. 6 criminal case, shows the apparent evacuation of Sen. Chuck Grassley (R-Iowa) from the Senate chamber as a uniformed officer separates him and his security detail from the first wave of rioters who had breached the building. Those rioters were led by Proud Boy Dominic Pezzola, who used a riot shield to shatter a Senate window and ignite the breach of the building near the chamber.

Grassley's caught-on-tape proximity to the pro-Trump rioters adds new dissonance to Fox News host Tucker Carlson's on-air minimization of the siege — a portrayal that palpably split Senate and House Republicans.

The video, taken by a rioter who entered the Capitol moments after the breach and released in a case separate from Pezzola's, shows the Proud Boy gazing past the police officer at the evacuating senator, though it’s unclear if he recognized Grassley. As the camera pans, Pezzola is shown speaking on his phone before turning away from the scene.

That first wave of the mob — which also included Jacob Chansley, known as the “QAnon Shaman" — would moments later follow Capitol Police officer Eugene Goodman up a flight of stairs to come within feet of the Senate chamber in a now-famous confrontation.

The footage is the latest example of how close powerful government figures came to a direct brush with the mob of then-President Donald Trump’s supporters. Rioters came within 40 feet of then-Vice President Mike Pence during his own evacuation, according to evidence released by the Jan. 6 select committee. And then-Senate Minority Leader Chuck Schumer, accompanied by his own security detail, came within sight of rioter Joshua Pruitt while waiting for an elevator.

“The security detail and Senator Schumer reversed course and ran away from the elevator, back down the ramp, away from Pruitt,” according to a “statement of facts” agreed to by prosecutors and Pruitt in connection with his plea deal.

Then-Vice President-elect Kamala Harris had a different kind of close call on Jan. 6: She had been ensconced at Democratic National Committee headquarters near the Capitol when police discovered pipe bombs had been placed outside the DNC and RNC buildings.

Just moments before the timing of the video, Grassley had been presiding over the Senate — filling in for Pence, who was evacuated from the floor himself just minutes earlier by Secret Service agents. The Iowan was the Senate president pro tem at the time, putting him in the line of presidential succession.

C-SPAN footage showed Grassley being rapidly ushered off the Senate dais at about 2:15 p.m. and out a nearby door.

Grassley told POLITICO that he couldn’t remember many details about the rushed evacuation, noting that he was taken down a back staircase to the first floor of the Capitol — where the footage shows he unknowingly had that close brush with rioters — and then down another staircase to the basement. Grassley's office declined to comment but did not dispute that the footage appeared to show the 89-year-old senator’s swift exit from the Senate.

“I wasn’t aware of any of it,” Grassley said of his apparent near-encounter. “They just said: ‘We’ve got to get you out of here.’”

The footage also underscores the possibility of more significant revelations about Jan. 6 sitting in the thousands of hours of security camera video that Speaker Kevin McCarthy has indicated he intends to release publicly, after providing early access to Carlson.

And Grassley's evacuation isn't the only snapshot laid bare by recently released footage in Jan. 6 criminal cases. Other film shows the moment the Senate parliamentarian’s door was breached, leading to rioters ransacking her office. NBC recently revealed that Sen. Jim Risch’s (R-Idaho) hideaway was among those trashed by rioters.

In addition, court papers connected to a newly filed criminal case indicate that rioters breached the House Appropriations Committee’s third-floor space in the building, before Capitol Police officers with their guns drawn subdued them.

“There, the officers held rioters under supervision while Members of the House of Representatives were evacuated from the House Gallery,” according to the charging documents.

Those new details are in addition to well-known breaches of former Speaker Nancy Pelosi’s (D-Calif.) office suite, Sen. Jeff Merkley’s (D-Ore.) hideaway and the Senate chamber itself.

The video of Grassley’s apparent close encounter was released in connection with Chansley’s criminal case, after a request by media outlets for videos the government used in his sentencing. Chansley is one of the most widely recognized members of the Jan. 6 mob due to his appearance during the attack — he wore a horned Viking helmet and face paint, striding shirtless through the Capitol.

He returned to the spotlight after Carlson aired security footage showing Chansley walking alongside police officers calmly, footage the Justice Department said misleadingly cast his hour-long trip through the Capitol as authorized by police.

The footage of Chansley’s entry into the Capitol, just moments after Pezzola set off the breach by smashing the window, appears to have been taken by Jan. 6 defendant Daniel Adams, who closely followed Chansley inside. Adams can be seen on security footage holding up his camera and recording the moment.

Pezzola is currently on trial for seditious conspiracy, along with other Proud Boys leaders.

The video also shows a moment that Chansley himself had highlighted in his own defense: his chastising another member of the mob for attempting to steal items from the Senate refectory. Other recently released footage shows members of the Proud Boys snatching snacks and drinks from the convenience store after they entered the building.

The Justice Department indicated that Carlson’s footage showed only a four-minute window of the hour Chansley spent inside the Capitol. That time also included Chansley breaching police lines outside the complex, a standoff with police outside of the Senate chamber and his decision to leave an ominous note for Pence on the Senate dais.

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Romney yells at Biden's budget director over Social Security

It's the latest instance of cross-party tensions boiling over on how to fix the entitlement program.

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Opinion | Joe Biden, Scandinavian

There may be deep divisions within the Republican universe these days — over trade, Ukraine, Trump, Fox News — but there’s one unifying assertion: President Joe Biden is hell-bent on taking the United States down the road to socialism.

Biden’s new budget proposal, with high taxes on the mega-rich and expanded medical help for the working- and middle-class, has only fueled the attacks that go back at least to the 2020 campaign. It was the dominant theme of the GOP convention; it’s how National Review attacks Biden’s student loan forgiveness program; it’s how Nikki Haley and Matt Gaetz decry the president’s budget. Donald Trump, never one for subtlety, simply labels Biden and his supporters “communists.”

In one sense, this is very old wine in not-so-new bottles. Attempts to brand progressive policies as “socialist” go back — literally — for more than a century. Measured by its accuracy and its political impact, it’s not proven all that potent. But given the persistence of the tactic, it might be useful to set down a few key notions:

• Joe Biden is at pains to assert that “I’m a capitalist. I’m not a socialist.”
• A lot of what Biden is proposing would look quite at home in Scandinavia and Western Europe.
• Those nations aren’t really “socialist” at all, even if they’re celebrated by America’s best-known socialist.
• Republicans really, really hate socialism — but will also scream bloody murder if Democrats suggest they want to so much as touch the most obviously socialistic programs of the American government.

Making sense of these assertions does not require squaring a circle; what it does require is an understanding of just how amorphous the term “socialist” is, and why whatever you call Biden’s various policy goals, they are firmly within the American political tradition — and may indeed be very smart politics, at that.

All through his two presidential runs, Sen. Bernie Sanders was asked what it meant that he called himself a “democratic socialist.” Invariably, the Vermont independent would point to the Scandinavian nations and their universal health care, paid family leave and free college education. (He did not call for the government to “control the means of production and distribution,” the classic definition of socialism and an omission at odds with the Democratic Socialists of America, a 92,000-member organization that asserts: “We want to collectively own the key economic drivers that dominate our lives, such as energy production and transportation.”)

But are Denmark, Sweden and Norway really “socialist” nations? They wouldn’t cut it for the DSA. The private sector is alive and well, businesses have a lighter tax burden than in the U.S., and even their health care systems are far from totally public. In Sweden, by one estimate, some 40 percent of health clinics are private, for-profit enterprises.

Indeed, throughout the industrialized world, the traditional goal of socialism has long since been jettisoned, even as elements of its core philosophy have been embedded in government policy. For example, Germany, whether run by center-right Christian Democrats or center-left Social Democrats, is a resolutely capitalist land, but its laws also require workers to be well represented on large corporations’ supervisory boards, where key decisions are made. In Britain, the Labour Party under Tony Blair renounced nationalization almost 30 years ago. The last Labour leader to embrace the idea, Jeremy Corbyn, presided over a historic walloping at the polls, and current leader Keir Starmer says he would not nationalize the energy industry (though a significant element of the party’s rank and file embraces the notion of “common ownership”).

Ideas like universal health care and expansive workers’ rights have long carried the label of “social democracy”: if not full socialism, then the notion that the government should craft a strong social safety net, impose higher taxes on the wealthy and limit the private sector’s power. (Those who see the hand of Karl Marx in such ideas — as Ronald Reagan did when he assailed the idea of Medicare back in 1964 — need to contend with the fact that the father of government-financed old age and health insurance was the ardent anti-socialist Otto von Bismarck, who first proposed the idea in 1881).

In the 2020 Democratic presidential contest, the left had its champions and Biden was most certainly not among them. But even the most committed Bernie Bro might acknowledge the president’s progress toward nudging the United States toward social democracy.

Consider the elements of Biden’s bipartisan $40 billion investment in semiconductor manufacturing — itself an impressive display of industrial policy. The package comes with strings, the New York Times notes. Companies have to pay union wages; they have to share some of their profits with the government; they have to provide free childcare for their workers; they have to run their plants with environmentally friendly energy sources. These proposals are of a piece with some of the more ambitious Biden policies, some of which, like the expanded child-tax credit, have expired, and some of which, like capping the price of insulin for seniors, remain in place and have been embraced by the private sector. His recent State of the Union address contained a swath of proposals to limit the power of private companies, whether by capping excessive airline baggage fees or hidden credit card charges.

The response to all of this from Republicans has been to raise the specter of “socialism.” Last month, the GOP-controlled House voted 328-86 for a resolution declaring that “socialist ideology necessitates a concentration of power that has time and time again collapsed into communist regimes, totalitarian rule, and brutal dictatorships. … Congress denounces socialism in all its forms, and opposes the implementation of socialist policies in the United States of America.” If the goal was to split their opponents, Republicans succeeded: More than 100 Democrats voted for the resolution which, taken literally, would condemn the policies of some of America’s most resolute allies, and which was clearly designed to throw shade at the president.

Of course, almost as vociferous as the GOP’s denunciation of socialism was its fury at the very idea the party might be moving to lay a finger on the two most clearly socialistic elements of U.S. policy — Social Security and Medicare.

When Biden used his State of the Union address to note that “some” Republicans were suggesting cuts in the programs — most specifically Sen. Rick Scott of Florida — GOP lawmakers erupted in anger. Scott, for his part, quickly amended his proposal sunsetting government programs by exempting the popular social insurance systems. It calls to mind the cry of a citizen at a congressional town hall meeting years ago: “Keep your government hands off my Medicare!” (Notably, Donald Trump also deserves some credit for steering the GOP away from a free-market orthodoxy intent on gutting retirement programs.)

It’s a little unfair to ascribe cognitive dissonance solely to Republicans. The confusion about what consists of “socialism” is pervasive. Polls show Americans disapprove of “entitlements,” but overwhelmingly approve of Social Security, Medicare and veterans’ benefits — in other words, programs people are entitled to by law. Sanders’ idea of free tuition for public colleges may seem a reach, but a generation or two ago, free college was widely available. City University of New York was famously tuition free from 1847 until 1976, and many state universities once imposed only fees. In some places, community college is still free.

A large majority of Americans see health care as a right, even as majorities of Americans say the government is too powerful and tries to do too much. This dissonance was crystalized by the election victory of Ronald Reagan, who proclaimed in his 1981 Inaugural Address that “government is not the solution to our problem, government is the problem,” and then presided over a government that was bigger when he left it. (For that matter, Margaret Thatcher never tried to repeal Britain’s national health insurance.)

In this populist moment, Biden has also won applause from the left and right for flexing government’s muscle when it comes to cracking down on Big Tech and the growth of monopolies, be they in the form of airlines or book publishers. Biden is showing his Rooseveltian roots, not just FDR but TR.

A long-running debate exists over why socialism failed to take root in the United States, unlike in Europe. In the near run, the success of Biden’s “social democracy” efforts will stand or fall on whether he can — as many of his Democratic predecessors did — define his policies not as the importation of a foreign ideology, but as part of a continuing effort to make the economic playing field fairer and safer without changing the fundamental rules of the game.

For a century or more, those efforts have met with powerful resistance, even as the political consensus gradually shifts toward a more robust American welfare state. The most recent example: Republicans have given up their efforts to repeal Obamacare after years of pushing to do just that. It turns out that, with a little more modest ambitions, “socialism” has found a home of sorts in this land of individual freedom — as long as you call it something else.

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Bank failures revive bitter Senate Democratic infighting

Five years to the day after Senate Democrats clashed bitterly over Donald Trump-backed bank deregulation, the failure of two banks is reigniting the old tension.

President Joe Biden on Monday criticized the former president’s loosening of bank regulations, when Trump and a Republican-controlled Congress approved a measure to roll back parts of the 2010 post-financial crisis reform bill known as Dodd-Frank. Biden didn’t mention that his own party played a significant role, but Sen. Elizabeth Warren (D-Mass.) is well aware.

“I wish I’d been wrong. But I knew I wasn’t,” Warren said in an interview this week about her opposition to the 2018 law. She’s now calling for repealing it: “Both parties participated in rolling back the rules. Now both parties need to participate in strengthening the rules.”

The current Senate Democratic discord is especially acute because the caucus had the numbers to block the 2018 effort — but under heavy pressure to cut a deal to help community banks in an election year, 17 of them supported it. The collapse of two banks with roughly $300 billion in total assets over the past week has animated those internal divisions among Democratic senators, who usually pride themselves on policy unity. And it starkly contrasts with Senate Republicans, who uniformly supported the last big banking bill.

Asked whether he regretted his vote, Sen. Michael Bennet (D-Colo.) told reporters: “No. I voted for a bill that was a bipartisan compromise.”

“Sometimes members choose policy positions and wait to see if history serves them,” said Senate Majority Whip Dick Durbin (D-Ill.), who opposed the legislation. “Sometimes it does, sometimes it doesn’t.”

In case it was unclear, he added: “I was on the right side of it.”

Republicans instantly ruled out passing new bank regulations on Tuesday, arguing federal regulators are already empowered to increase scrutiny of those banks. So Democrats will have to decide whether it’s worth taking their internal fight to the Senate floor again.

Several Democrats said they want to see either repeal of the 2018 legislation or other tougher laws. But at the moment there is no apparent solution that would get 51 Democratic votes, much less the 60 senators needed to vault a filibuster.

“We’re going to try,” Senate Banking Committee Chair Sherrod Brown (D-Ohio) told reporters. But he added that “I don't know how we do a legislative fix.”

Exacerbating the internal fight: Democrats don't agree whether the rollback was actually to blame for the present bank failures. Sen. Jon Tester (D-Mont.), who cut that 2018 deal with Republican Sen. Mike Crapo (R-Idaho.), said in an interview on Tuesday that he stands by his vote and disagrees with those blaming his legislation: “I don’t see it the same way. If you read the bill, you’ll know that it doesn’t let them off.”

“Would I vote the same way [today]? Yes,” said Sen. Angus King (I-Maine), who caucuses with Democrats and voted in favor of the 2018 legislation. “Because of the important help to smaller banks and community banks; that was my mission.”

The 2018 law peeled back parts of Dodd-Frank to exempt smaller banks from federally administered “stress tests” that weighed their ability to weather economic downturns. Its enactment meant Dodd-Frank's stricter federal oversights only applied to a handful of bigger banks.

And the issue is already becoming a cudgel in Senate races. Rep. Ruben Gallego (D-Ariz.), who is running for the Arizona Senate seat, went after Sen. Kyrsten Sinema (I-Ariz.) for her vote in support of the 2018 law, calling the votes the “most salient example of how we’re different.” Of the most vulnerable Democratic senators up for reelection next fall, Brown, Tammy Baldwin of Wisconsin and Bob Casey of Pennsylvania opposed the 2018 law, while Sens. Joe Manchin of West Virginia, Tester and Sinema supported it.

“It was obviously a mistake,” said Sen. Martin Heinrich (D-N.M.), another incumbent senator, who missed the 2018 vote but criticized the bill then. “It was ill-advised, these are big banks … and they need to have some backstops."

Asked whether he sensed a divide among Senate Democrats, Sen. Tim Kaine (D-Va.) replied: “That question answers itself. Because there were some in 2018 who thought it was a good idea … and I put myself in that category; I was listening to my community banks.”

Silicon Valley Bank and Signature Bank, both of which qualified for the 2018 exemption, had lobbied hard for the measure by assuring lawmakers they were not big enough to pose systemic risk. Yet federal authorities cited that exact problem on Sunday when they announced they would backstop all of Silicon Valley Bank’s deposits after it collapsed thanks to a large-scale run.

“Working together, a good job — a miraculous job — has been done to stem the possibility of systemic risk,” Rep. Maxine Waters said in an interview. The Californian is the top Democrat on the House Financial Services Committee and opposed the 2018 law.

She also warned against jumping to conclusions on whether congressional action had prompted the bank failures: “I don't know what could be said about what has happened here with this; the collapse of Silicon Valley as it relates to Dodd-Frank.”

As it stands, the toughest regulations apply only to banks with more than $250 billion in assets. Silicon Valley Bank and Signature Bank held around $209 billion and $110 billion, respectively, when regulators took over. Summing up the back and forth, Warren said midsize banks were acting like “little community banks, and should be only lightly regulated. That was laughable on its face.”

It's made a painful issue for Democrats for years now, ever since a group of party centrists went around Brown, then the top Democrat on the Banking Committee, to cut a deal with Republicans. Brown said on Bloomberg Radio on Tuesday that some Democrats “don't fight hard enough,” but then he went into peacemaking mode.

“I think that it's been illuminating to a lot of people,” Brown told reporters later. “I think all the Democrats [now] realize we need stronger rules.”

Even with their entrenched positions, Democratic senators are trying to avoid a replay of the backbiting five years ago when Warren called out her colleagues that supported deregulation in a fundraising email. That move prompted a contentious meeting among Democratic chiefs of staff in which Dan Geldon, then Warren’s top aide, cited nonpartisan Congressional Budget Office warnings that more bank failures could result from rolling back Dodd-Frank, according to three people familiar with the meeting.

Geldon argued at the time that Warren was fighting on principle and not just to target other senators, while aides to senators that supported the bank bill blanched at her tactics and said they were merely reacting to banks back in their states, according to those three people.

Now Democrats can at least face that dispute from the majority, when they're able to choose what comes to the floor. Senate Majority Leader Chuck Schumer has been careful about how he characterizes a potential congressional response, saying Capitol Hill will “look closely” at next steps.

New Hampshire Democratic Sens. Maggie Hassan and Jeanne Shaheen both said they’d be willing to reexamine the 2018 law, which both supported, if investigations find that was the cause of the failures. But they evinced no regrets about their position.

“The reality is, it was very bad management at SVB. And you can’t fix that with any regulation,” Shaheen said.

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Senators from both parties press Austin on sending F-16s to Ukraine

A group of senators from both parties is pressing the Pentagon for more information on what it would take to send F-16 jets to Ukraine.

The fresh push came in a letter Tuesday to Defense Secretary Lloyd Austin from eight senators, and obtained by POLITICO, as top administration officials from President Joe Biden on down have poured cold water on bipartisan calls to send U.S.-made fighters into the fight for now.

The conflict between Russia and Ukraine is "now at a critical juncture," the senators wrote, arguing F-16 fighters could give Kyiv an edge as Moscow's full-tilt invasion enters a second year.

"After speaking with U.S., Ukrainian, and foreign leaders working to support Ukraine at the Munich Security Conference last month, we believe the U.S. needs to take a hard look at providing F-16 aircraft to Ukraine," the senators wrote. "This would be a significant capability that could prove to be a game changer on the battlefield."

The letter was organized by Sen. Mark Kelly (D-Ariz.).

The senators requested Austin provide them with assessments by the end of the week on a variety of factors needed to successfully transfer F-16s to Ukraine.

Among their questions, the lawmakers asked how high Ukrainian officials are ranking fighter jets when making requests for weapons and how the F-16s might be sourced if approved — either newly produced or from current inventories. They also sought the military's assessment of what impact F-16s would have on the conflict and how quickly Ukrainian pilots could be trained on the jets.

The group hailed reports that two Ukrainian pilots came to the U.S. for a fighter skills assessment at Tucson's Morris Air National Guard Base, in Kelly's home state, which they called a "critical step in gauging" their readiness to fly F-16s.

Also signing onto the letter were Democrats Tammy Duckworth of Illinois, Tim Kaine of Virginia, Martin Heinrich of New Mexico and Jacky Rosen of Nevada as well as Republicans Lisa Murkowski of Alaska, Tommy Tuberville of Alabama and Ted Budd of North Carolina.

Bipartisan efforts to convince the Biden administration to send F-16s, or facilitate other countries sending them to Ukraine, have been bolstered by assessments such as those of Gen. Christopher Cavoli, the top U.S. and NATO commander in Europe. Cavoli told lawmakers behind closed doors at the Munich Security Conference last month that sending advanced weapons, including F-16s and long-range missiles, could help bolster Ukraine's defenses.

But top civilian officials, including Biden and White House national security adviser Jake Sullivan, say fighters aren't an immediate battlefield need compared to other capabilities.

Pentagon policy chief Colin Kahl also defended the administration's stance, telling the House Armed Services Committee last month that the most optimistic timeline for delivering older F-16s would be roughly 18 months, while producing newer jets could take three to six years to deliver.

"It is a priority for the Ukrainians, but it's not one of their top three priorities," Kahl testified. "Their top priorities are air defense systems ... artillery and fires, which we've talked about, and armor and mechanized systems."

The Senate letter follows a bipartisan effort in the House, spearheaded by Maine Democrat Jared Golden, to convince Biden to send Kyiv F-16s or similar aircraft.

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The crypto 'contagion' that helped bring down SVB

The lender's lightning collapse is testing the claim that traditional finance is perfectly insulated from volatile crypto markets.

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