Will the Silicon Valley Bank failure lead to a new financial crisis?

Progressive New Jersey Democrat Lisa McCormick has alleged that Rep. Josh Gottheimer may have played a role in the collapse of Silicon Valley Bank.

McCormick argued that Gottheimer took campaign money from the financial industry and voted to weaken regulations that may have prevented the institution's collapse.

"According to records from the Federal Election Commission," McCormick said, "Gottheimer took nearly $6 million in campaign contributions from the financial industry since 2015, including more than $4.9 million from securities and investment interests, and he voted for a law that allowed Silicon Valley Bank to avoid tighter regulations."

She went on to criticize Gottheimer for being the only New Jersey Democrat who voted for the Economic Growth, Regulatory Relief, and Consumer Protection Act, which removed Silicon Valley Bank from the stricter regulatory landscape for financial institutions in the United States established in the wake of the global financial crisis.

"Gottheimer's vote weakened regulations on banks like Silicon Valley Bank, putting depositors and the broader economy at risk," said McCormick, who spent less than $5000 on the campaign when she earned 159,998 votes in her 2018 Democratic primary challenge to US Senator Bob Menendez.

McCormick's criticism comes after the collapse of Silicon Valley Bank, which had total assets of approximately $59 billion as of December 31, 2021.

The bank was exempted from some of the more stringent regulatory requirements under the Economic Growth, Regulatory Relief, and Consumer Protection Act, which was signed into law by President Donald Trump in May 2018. Gottheimer is the only New Jersey Democrat who voted for the bank deregulation measure.

The act made significant changes to the regulatory landscape for banks and financial institutions in the United States. One of the most significant changes introduced by the act was an increase in the threshold at which banks are considered "systemically important" and subject to additional regulatory requirements.

Silicon Valley Bank, which had been subject to regulatory oversight before the act was passed, would have been subject to fewer regulatory requirements than it would have been prior to the passage of the legislation. However, it is worth noting that Silicon Valley Bank is not a traditional bank and may have been subject to different regulations than larger, more traditional financial institutions.

McCormick also said that Gottheimer is also one of the 196 U.S. lawmakers who took direct contributions from cryptocurrency con artists Sam Bankman-Fried and other senior executives at FTX, an exchange that filed for bankruptcy in November after unusually close ties with Alameda Research, an affiliated hedge fund, were revealed.

After the lawmakers received the money, it became clear – according to the work of journalists, the criminal charges and admissions of guilt from FTX insiders – that those funds sprang from a colossal financial swindle.

McCormick's criticism of Gottheimer's ties to the financial industry is not new.

In a statement released last year, McCormick criticized Gottheimer for "selling out" to Wall Street and corporate interests.

"Our political system is broken but politicians are making it worse by contributing to hyper-partisanship with gerrymandering to guarantee they get re-elected, while selling out the people they represent to get money from corporate lobbyists and special interests," said McCormick, who argued that Democrats would institute such reforms as public campaign financing if they wanted to end corruption that followed the Supreme Court decision in Citizen United.

"Josh Gottheimer has consistently put the interests of Wall Street and corporate America ahead of the people of New Jersey," said McCormick. "He has taken millions of dollars from the financial industry and big corporations and voted for policies that hurt working families and the middle class."

"Having Rep. Josh Gottheimer on the House Financial Services Committee is like putting the fox in charge of the henhouse," said McCormick. "Nobody in Congress takes more bribe money from banks than Gottheimer, who gutted the Consumer Financial Protection Bureau (CFPB) & deregulated Wall Street."

Gottheimer has defended his record, saying that he has worked to promote economic growth and job creation in his district.

In a statement, Gottheimer said that he has "always put New Jersey's families and small businesses first," but McCormick pointed out that he currently has more than $13 million in cash on hand in his congressional campaign fund, according to the FEC.