The crisis of the week is banking

Banking must have been next on the to-do list of the things the Biden administration is planning to destroy.

In two years, President Joe Biden and the wrecking crew of crazies, wokesters and career incompetents he has put into his government have screwed up every corner of America.

Everything from the economy and our military to our kitchen gas stoves has already been wrecked or is under threat from the Biden White House.

Even the entire world is in danger, thanks to the wizards in his state department.

They did nothing to deter Russian President Vladimir Putin from invading Ukraine a year ago, and now, instead of leading the international call for a negotiated peace, they are weaponizing and subsidizing Ukraine and risking a nuclear war between us and Russia.

Compared to the possibility of armageddon, maybe the banking crisis isn't actually that important in the long run.

According to the experts, the sudden death of Silicon Valley Bank in California and Signature Bank in New York City earlier this month were not accidents.

They were a predictable result of the Biden administration's insane multi-trillion-dollar spending spree that spiked inflation to nearly 8%, which was followed by the Federal Reserve's failure to raise the interest rate soon enough to suppress it.

Then, to make matters worse, when the Fed finally did raise interest rates, it did it too quickly.

As one guy on Fox Business described it, the Fed drove the economy at 150 mph — and then slammed on the brakes.

SVB and Signature were big, proudly woke, mismanaged banks whose investment policies were especially vulnerable to the Fed's quick interest rates hike.

They had too much of their capital reserves locked up in long-term, low interest Treasury bonds, and when interest rates spiked, the value of those bonds fell below what the banks had paid for them.

Vidhura Tennekoon, an assistant professor of economics at Indiana University, offered a good explanation of what happened at SVB:

"Customers of SVB were withdrawing their deposits beyond what it could pay using its cash reserves, and so to help meet its obligations the bank decided to sell $21 billion of its securities portfolio at a loss of $1.8 billion. The drain on equity capital led the lender to try to raise over $2 billion in new capital."

When SVB tried to raise capital to cover its losses, it sparked a fatal panic among its upscale depositors — about 90% of whom had deposits above $250,000.

The bank went belly up quickly when its depositors realized that their huge deposits — which were insured for only $250,000 by the federal government — were at risk and they began pulling out billions of dollars.

Next thing you know, there's a national banking crisis and President Biden is on TV playing the hero and saying he's going to fix everything by using the federal government to insure all of SVB's deposits, no matter how big.

In other words, all those rich people and companies with their millions on deposit at SVB are to be made whole — i.e., bailed out.

So, as in 2008, the rich will be protected from financial harm by the federal government, and middle-class taxpayers will ultimately pay the bill in higher taxes, higher interest rates or higher depositor insurance fees.

Once again, we see how the government makes laws that don't apply to their rich friends: Our federal deposit insurance is limited to $250,000 but theirs is now infinity.

Meanwhile, I'm waiting for Biden to promise to replenish the money millions of us have lost in our 401(k)s since he came in and tanked the economy.

I have the feeling I'll be waiting for a long time.

Michael Reagan, the son of President Ronald Reagan, is an author, speaker and president of the Reagan Legacy Foundation.