Before Friday, Silicon Valley Bank was the sixteenth largest bank in America. Now it bears the standard of being the second largest bank failure in US history, only upstaged by the 2008 financial crisis. As the initial shock – both to the market and to news headlines – is wearing off, some things are clear: SVB was badly run, had mismanaged its asset investments, and as a truly silicon valley-centric bank, had an un-diversified portfolio tied to tech start-ups, crypto, and its California clientele. But the real catalyst? A long year of the Biden administration’s failure to combat inflation caused the Fed to hike interest rates, resulting in a major loss of asset value for the bonds SVB owned. Now, the Fed, FDIC, and Treasury Department have decided to protect depositors – but not shareholders – beyond the standard $250,000 insured cap for deposits. In short, the average taxpayer is bailing out the Silicon Valley elite.

Michael Strain is the Director of Economic Policy Studies at the American Enterprise Institute. Dr. Strain is also the author of The American Dream Is Not Dead: (But Populism Could Kill It).

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