Watch Kennedy’s comments here.

WASHINGTON – Sen. John Kennedy (R-La.), a member of the Senate Banking Committee, today spoke on the Senate floor about the Biden administration’s response to recent bank failures. 

Key comments from Kennedy’s speech include:

“When I ran for this office in 2016, I observed at that time that . . . we had too many undeserving people at the top in America getting bailouts, and we had too many undeserving people at the bottom getting handouts. And the rest of America—most of America in the middle—was getting the bill, and I didn't think that was fair. And apparently it’s still the case today, Mr. President, and I still don't think it's fair.”

"Now President Biden chose to bail out three of our banks. It was a bail out. You can pretty it up any way you want to, and you can put perfume on a pig, but it still smells like a pig. This was a bailout.”

“It was a bailout for two reasons. Number one, except for the people who own the stock in the banks and their unsecured creditors, President Biden and his regulators guaranteed that nobody affiliated with these banks would have any losses. And he said, ‘That's not a bailout because money's not being provided by the American people. It's being provided by all the other banks in America.’”

“Well, Mr. President, as you know as well as I do, there is no money fairy. There isn't anything free. . . . Those banks . . . they're just going to pass on those costs . . . and, last time I checked, most depositors in banks in America are taxpayers as well.”

“Now, let me let me say a word about Silicon Valley Bank. All the bank failures were an abomination, but I think Silicon Valley Bank is symptomatic of the problem among all three. . . . First of all, Silicon Valley Bank was not broke. It was not an insolvency problem. It wasn’t insolvent. Silicon Valley Bank had a liquidity problem.”

“I mean, here's what happened: Silicon Valley Bank took in a whole bunch of deposits on which they were paying an interest rate, and then Silicon Valley Bank took that money and went out and bought a bunch of securities paying a higher interest rate than Silicon Valley Bank was paying the depositors.”

“You say, ‘That's pretty smart.’”

“There's just one problem. The securities that Silicon Valley Bank bought were very sensitive to interest rates, and, as interest rates went up—and they have—the value of those securities went down if Silicon Valley Bank had to sell them.”

“And, sure enough, Silicon Valley Bank got itself on the position of having to sell them because a lot of its depositors got scared about the bank’s position, and other reasons, and said, ‘We want our money back.’”

“And Silicon Valley Bank didn't have the money because it had to go sell these securities at a loss, and that put it at risk. And that's why we had had a liquidity problem that could have been fixed. It wasn't broke.”

“President Biden's bailout could have been avoided if one or more of three things had happened.”

“Number one: If the management of Silicon Valley Bank had known the difference between a banking textbook and an L.L. Bean catalog, Silicon Valley Bank would have never bought securities that are so sensitive to interest rate[s] without hedging that risk, and it's a very easy thing to do.”

“Number two, okay. Silicon Valley Bank management did it . . . The regulators didn't catch it. There's been a lot of talk about ‘Silicon Valley Bank wasn't being regulated because of a bill passed back in 2018 or 2019.’ That's not true. Silicon Valley Bank was heavily regulated. It had to file regular reports with the federal banking regulators. It was subjected to stress testing. It was subjected to liquidity stress testing.”

“All regulators had to do was read the reports that Silicon Valley Bank was submitting, and they would have seen the problem. You know who saw the problem, way back in November and October? Stock analysts in the private sector that were covering Silicon Valley Bank warned way back last fall—they said, ‘You know what? This bank is . . . setting itself up for a potential liquidity problem.’ The private sector knew it.”

“Where were the regulators? Where were they? You couldn't have found them with a search party. I guess they were asleep, but this whole debacle could have been avoided if the regulators had just done their job and stepped in and said, ‘Silicon Valley Bank, what you're doing is dumb, and you can't do it anymore.’ That would have avoided it.”

“The third thing that could have avoided the president’s bailout . . . The Federal Reserve, the Secretary of Treasury, the head of the FDIC, and all the other regulators allowed the bank to go on instead, instead of getting on the telephone, and calling other banks and saying, ‘I've got a situation here with Silicon Valley Bank. It's not insolvent. It’s just illiquid. We want you to buy it.’ That's what normally happens, and that's all the regulators had to do.”

“Now, why didn't they do that? There's been a lot of talk about, well, they had an auction for the bank, and nobody wanted it. That's not true. There were buyers, but the problem was that the people at the FDIC do not like bank mergers.”

“Some bank mergers make sense. Some bank mergers don't make sense. In this case, it would have made extraordinary sense. And, so, the folks at the FDIC stalled and re-stalled, and then we had mass panic.”

Kennedy’s full comments are here.