Report: Newsom could personally benefit from federal help with SVB failure
Wed, Mar 15, 2023 4:40 PM
By Cole Lauterbach, The Center Square
New reports say California Gov. Gavin Newsom might be one of the account holders that will benefit from federal aid propping up the now-insolvent Silicon Valley Bank.
Newsom announced Saturday that he was “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."
The Federal Deposit Insurance Corporation took control of the bank after a disclosure showing steep losses to maintain liquidity created a panicked rush to pull funds by account holders.
The FDIC announced Monday that it had transferred the remaining bank assets to a bridge entity and that accounts with more than the government-insured cap of $250,000 would be made whole.
As first reported by the Intercept, some of those bank clients include California-based businesses formed by Newsom.
The Intercept found SVB listings of clients that included CADE, Odette, and PlumpJack wines – all owned by Newsom but operated by family members and held in a blind trust managed by an attorney.
The Intercept spoke to an anonymous source who identified as a former employee of Newsom. The source said the successful California businessman also had personal accounts at SVB but the Intercept didn’t confirm that information from Newsom’s office or SVB’s bridge bank.
California laws regarding conflict of interest by public officials say “a public official has a disqualifying conflict of interest in a governmental decision if it is foreseeable that the decision will have a financial impact on his or her personal finances or other financial interests.”
The rules do provide exceptions that allow for participation "if the effect on the official’s interests is indistinguishable from the effect on the public."
Federal officials noted that aiding the bank was an attempt to stop a larger panic that put the American financial sector as a whole at risk.
Newsom has yet to comment publicly on the matter.