California Democratic Gov. Gavin Newsom cheered the federal government’s decision to protect Silicon Valley Bank’s depositors without mentioning that he is one of them.
Newsom praised the Biden administration on Sunday after the federal government announced that the Federal Deposit Insurance Corporation (FDIC) would cover all depositor losses from the Silicon Valley Bank (SVB) collapse. The bailout was a surprise for SVB’s largest depositors as FDIC insurance is guaranteed to cover only up to $250,000 per account.
Newsom, who is rumored to be considering a White House run if President Joe Biden declines, said in a statement on Sunday that the “Biden Administration has acted swiftly and decisively to protect the American economy and strengthen public confidence in our banking system.”
“California is a pillar of the American economy, and federal leaders did the right thing, ensuring our innovation economy can continue to grow and move forward,” the California governor said.
Newsom said the FDIC’s decision would have “profoundly positive impacts” on California businesses, but he failed to mention that his own wineries may stand to benefit from the FDIC’s unusual action, according to The Intercept. Newsom-owned wineries CADE, Odette, and PlumpJack all banked with SVB, and each was at risk of losing its deposit if it held over the $250,000 threshold in a single account.
Newsom also kept personal accounts at the failed bank, a source told The Intercept.
“Governor Newsom’s business and financial holdings are held and managed by a blind trust, as they have been since he was first elected governor in 2018,” a Newsom spokesman told The Intercept in an email.
The Biden administration and FDIC’s decision to backstop all deposits at Silicon Valley Bank came after Newsom personally coordinated with the White House and other top officials.
“Over the last 48 hours, I have been in touch with the highest levels of leadership at the White House and Treasury. Everyone is working with FDIC to stabilize the situation as quickly as possible, to protect jobs, people’s livelihoods, and the entire innovation ecosystem that has served as a tent pole for our economy,” Newsom said on Saturday. He did not say what his conversations entailed.
Newsom also has other ties to SVB. Newsom’s wife, Jennifer Siebel, founded the California Partners Project, a charity that received a $100,000 donation from SVB in 2021. SVB Capital President John China sits on the charity’s board of directors.
SVB was the 16th largest bank in the U.S. before it collapsed last week with roughly $175 billion-worth of customer deposits. Over 90% of those deposits were over the FDIC’s $250,000 threshold for guaranteed insurance.
The FDIC is an independent agency that is funded through premiums banks and other financial institutions pay on the FDIC’s insurance. At the end of last year, the FDIC’s Deposit Insurance Fund held $128.2 billion.