With a slightly askew mirror in the background, Rep. Katie Porter sat in her Irvine room and watched Instagram live as several regional banks teetered on the brink of collapse, with depositors desperately seeking to get money out of their accounts.
Porter explained to her followers the basics of how banks hold customers’ money, why Silicon Valley Bank was closing, and how, as a child, the local bank in her Iowa farm town experienced a similar form of instability.
He also criticized Republicans and some of his fellow Democrats for voting in 2018 to rescind certain regulations and oversight under the Dodd-Frank Wall Street Reform and Consumer Protection Act, which Congress passed in the wake of the financial crisis more than one of each.
“Lo and behold, the Republicans didn’t listen and a lot of the Democrats didn’t listen,” Porter said in a video that drew some 26,000 views. “That’s crazy”.
The second largest bank shutdown in US history has been a moment of notice for Porter, whose campaign to succeed Sen. Dianne Feinstein has so far been infused with issues of economic equity and how these recessions disproportionately hurt people with low income.
Still, it is doubtful that the events of the past week will become a defining issue in the 2024 US Senate race in California. His two main opponents, Democratic Reps. Barbara Lee of Oakland and Adam Schiff of Burbank, voted against the 2018 reversals. Porter was not yet in the House of Representatives, but he openly opposed them during his first campaign in Congress. that same year.
For his part, Schiff supported the original approval of Dodd-Frank, telling The Times in 2014 that it would be a mistake to repeal that supervision of banks. This week he introduced a bill with Sen. Richard Blumenthal (D-Connecticut) that, if passed, would try to recapture bonuses and stock sales of bank executives in the two months before a bank collapsed. It would also impose a 90% tax on bonuses for bank executives who earned $250,000 or more the year their bank was taken over by the Federal Deposit Insurance Corporation.
Also, Schiff’s office sent a letter to various regulatory agencies and the Department of Justice asking them to examine Goldman Sachs’ role in the demise of 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 of the bank proved catastrophic,” Schiff said in an emailed fundraising message Wednesday.
After the Northern California bank collapsed, Lee linked this bank run to his personal history of receiving public assistance and his support for anti-poverty programs. He said the Biden administration’s decisive action to bail out the bank’s depositors averted catastrophe, adding that moments of economic uncertainty like this resonate with voters.
“Their jobs could have been on the line,” Lee said of bank employees and startups whose assets he owned. “It is a very important issue for voters. We know that it is the shareholders and CEOs who mismanaged these banks who must be held accountable.”
Still, the collapse of the SVB and the bailout of the First Republic highlighted how the financially precarious state of American life will be a central issue in the Senate race, with each candidate striving to convey to voters what an energetic watchdog of the Senate would be like. financial sector. .
“Politicians are more aware that people at all ends of the political spectrum are living a life of economic scarcity and injustice,” said businessman and anti-poverty activist Joe Sandberg, who is backing a 2024 ballot measure to raise the minimum wage. in California. “What is common in the United States is living paycheck to paycheck. What is rare is having financial security.”
The recent bankruptcy of the bank was followed by the Biden administration saying it would make sure depositors get all their money, even amounts above the Federal Deposit Insurance Corporation’s normal limit of $250,000. Signature Bank also failed, and several others revealed they were in trouble. Candidates and people who watched the race said the economic hardship of the middle class will be a major issue among voters across the state.
“I think Katie Porter has a very strong message about the recklessness of financial institutions and the totally unequal distribution of power,” said former Obama communications adviser Bill Burton.
“To the extent that this campaign cycle is a problem, I think it’s too early to say honestly. And while Adam Schiff hasn’t made a name for himself on these issues, I don’t think it’s beyond him to find a path to credibility.”
On Tuesday, Porter inserted a bill along with Sen. Elizabeth Warren, who recently endorsed her, that would repeal a central part of the 2018 rollback of the Dodd-Frank banking laws. If approved, banks with $50 billion in assets or more would have to more regularly assess whether they have enough cash on hand to pay for losses during market downturns and meet more stringent requirements for the amount of capital they hold.
That threshold is currently $250 billion; Silicon Valley Bank’s assets under management totaled $213 billion.
Porter, a UC Irvine law professor before he was elected to Congress, in an interview with The Times made a not-so-subtle comment about Schiff, suggesting that his opposition to the 2018 legislation had more to do with his battles with Trump than with a profound belief that the reversal was wrong.
“He wanted to be the antagonist of Trump and he was in many ways,” he said, showing his willingness to attack a rival early in the campaign. “It was a vote against Trump. When you look at who else voted for him…it’s a lot of people who were in his kind of circle of political influence.”
A Schiff campaign spokesperson said Porter’s “false negative attacks on Adam will only increase support for him among voters who are interested in progress on homelessness, public safety and the economy, not in the confusion”.
The longtime Burbank congressman is best known for his recent work on the intelligence committee and his central role in the impeachment trials against former President Trump.
The former prosecutor seems aware that he must move beyond his opposition to Trump and speak out about the rising cost of living in a state where homeownership is increasingly inaccessible and homelessness is rampant. A recent survey by the Public Policy Institute of California found that 55% of respondents were worried that they would not be able to pay their rent or mortgage next month.
For Schiff, SVB’s failure was related to an inherent injustice in economics, which “works for bank executives who take excessive risks with other people’s money.”
“A lot of my attention lately has been on democracy,” Schiff said in an interview this week after participating in a homeless outreach program in his district.
“Economic issues and democracy issues are really part of the same pole. When things don’t work out, when people see that their quality of life is below that of their parents or the future of their children even more doubtful, they begin to be open to a demagogue who appears and says that only he can fix things. things”.
Recent polls from The Times found that Schiff has the support of 22% of registered voters, with 20% supporting Porter and 6% supporting Lee. The rest chose other candidates or were undecided. No known Republicans have entered the race thus far.
On the UC Davis campus this week, Porter stood in front of a white board, his signature accessory during congressional hearings, in a packed classroom before about 75 eager college students.
There was little mention of the bank’s collapse, with questions more focused on women’s reproductive rights, environmental issues, and the labor movement. Still, Porter was quick to return to her experience in Congress and her love of oversight hearings in which she’s peppered bank executives and pharmacists with tough questions.
Freshman Jack Jacobs listened carefully, trying to decide who he would like to work for this election season. He had also attended Schiff’s 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 it was also important to try to make the economy more equitable through better housing policies.
“I’m looking for someone who is going to be more liberal. I definitely don’t want a person who is a moderate, who is going to be another (Sen.) Kirsten Sinema or (Sen.) Joe Manchin,” she said, referring to two Democratic senators who have opposed her voting rights party. and recently environmental legislation.
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In Arizona, newly independent Sinema is now being challenged from the left by Rep. Rubén Gallego, who this week criticized her for undoing regulations, saying: “When bank lobbyists asked me to weaken bank regulations, I said no. When Senator Sinema was asked, she asked how much and she voted yes. Now we are all going to pay for her mistake.
Like Gallego, Porter has highlighted how his opponents have taken money from corporate political action committees and sees focusing on the haves and have-nots of capitalism as an important issue.
“It all has to do with people feeling like there are two sets of rules in the economy,” he said. “The rules for the people at the top, and then for the rest of us.”