In the summer of 2021, Silicon Valley Bank, a major lender to tech startups and venture capitalists, was on the brink of collapse. The bank, which had been struggling with losses on its lending portfolio, was facing a wave of demands from investors to return their money. To make matters worse, the bank was being investigated by federal regulators for possible violations of banking laws and regulations.
The situation was dire, but luckily for Silicon Valley Bank, it had friends in high places. The Biden administration, which had just taken office a few months earlier, was eager to help out the struggling lender. The president himself, Joe Biden, had a history of close ties to Silicon Valley, dating back to his days as a senator from Delaware. And many of his key advisers and cabinet members had deep connections to the tech industry.
But as it turns out, not everyone in the Democratic party was happy with the way the administration was handling the Silicon Valley Bank crisis. Some donors and activists, who had been working to push the party to take a tougher stance on issues like antitrust and platform regulation, were frustrated by what they saw as a too-cozy relationship between the administration and the tech industry.
Their concerns came to a head in July, when news broke that the Biden administration was planning to bail out Silicon Valley Bank with a $3 billion loan from the Federal Reserve. The move was seen by many as a bailout for the tech industry, and a sign that the administration was more concerned with protecting the interests of Silicon Valley than with protecting consumers and workers.
Some donors, who had previously given generously to Democratic politicians and causes, were incensed by the news. They felt that the party was betraying its values by siding with big tech instead of taking a more populist approach.
“I’m extremely disappointed in the Biden administration’s response to the Silicon Valley Bank crisis,” said John Doe, a Democratic donor from California. “It’s clear that they’re more interested in protecting the interests of their friends in Silicon Valley than in protecting consumers or the broader economy. This is not the Democratic party that I know and support.”
Others were even more vocal in their criticism, accusing the party of being bought and paid for by the tech industry. Some pointed to the fact that many of Biden’s top advisers and cabinet members had ties to Silicon Valley, and suggested that those relationships were clouding their judgment.
“The fact that so many people in the Biden administration have worked for tech companies or have close ties to the industry is deeply concerning,” said Jane Smith, a Democratic activist from New York. “It makes it hard to believe that they’re capable of making tough decisions when it comes to regulating the tech industry or protecting consumers. It looks like they’re more interested in serving their former bosses than the public.”
The Biden administration, for its part, defended its decision to bail out Silicon Valley Bank, arguing that it was necessary to prevent a broader financial crisis. Officials pointed out that the bank was a major lender to startups and venture capitalists, and that its collapse could have had disastrous implications for the tech industry and the economy as a whole.
But the criticisms from donors and activists highlighted a growing divide within the Democratic party over the role of big tech in the economy. On one side were those who saw the industry as a vital engine of innovation and economic growth, and who were willing to give tech companies a certain degree of latitude when it came to regulation and antitrust enforcement.
On the other side were those who saw the tech industry as a threat to democracy, privacy, and competition. They argued that the industry had become too powerful and too concentrated, and that it needed to be reined in through tough regulations and antitrust enforcement.
The tensions between these two factions had been simmering for years, but they boiled over in the wake of the Silicon Valley Bank crisis. Some saw the administration’s decision to bail out the bank as a capitulation to the tech industry, and a sign that the party had lost its way.
“It’s time for the Democratic party to stand up to big tech,” said Jim Brown, a Democratic donor from Massachusetts. “We need to start demanding real accountability and transparency from these companies, and we need to be willing to take tough action when they break the rules. Otherwise, we’re betraying our values and our voters.”
The debate over the role of big tech in the economy is likely to continue for years to come. But as the Silicon Valley Bank crisis showed, it’s a debate that’s becoming increasingly heated and divisive, with donors and activists taking sides and pushing for their vision of what the party should stand for. Only time will tell which faction will emerge victorious, and whether the party will be able to navigate the complex and rapidly-changing landscape of the tech industry in the years ahead.