Francis Chung/E&E News/POLITICO via AP Images
Rep. Ro Khanna (D-CA) speaks during a House Oversight and Reform Committee hearing, September 15, 2022, on Capitol Hill in Washington.
The customer base of Silicon Valley Bank (SVB), which collapsed last week, includes the personal and business accounts from the heart of the technology sector and other venture capitalists. Reporting in the wake of SVB’s collapse has revealed that even California Gov. Gavin Newsom held personal accounts, as well as business accounts for three wineries he owned, at SVB.
SVB’s failure inevitably led to a weekend-long hissy fit, a special pleading for a government bailout from venture capitalists like David Sacks. Their insistence that the economy could be on the brink of failure worked; by Sunday evening, regulators announced that the federal government would be stepping in, meaning that all depositors would have access to their money by the following day.
As banking expert Daniel Davies told the Prospect, these VCs could have easily covered whatever shortfall existed at their portfolio companies. “The venture capitalists basically used the threat of thousands of startups shuttering as a political human shield to get a bailout,” Davies explained.
Alongside the tech elite advocating for the federal government to backstop SVB was the congressman from Silicon Valley, Rep. Ro Khanna (D-CA). Khanna made the media rounds last weekend. On CBS’s Face the Nation, he urged the Treasury Department to provide more clarity on what exactly the department was doing. He waxed poetic about how the payroll for companies was tied up through SVB, even claiming that some of the firms in question were trying to cure cancer. “The principle needs to be that all depositors will be protected … I have no sympathy for the executives, no sympathy for the people who have stock there,” Khanna said.
On MSNBC host Chris Hayes’s show, Khanna carried the same message. He recalled how he voted against the 2018 bank deregulation bill that critics say precipitated this incident. By Tuesday, he had co-sponsored legislation introduced by Rep. Katie Porter (D-CA) and Sen. Elizabeth Warren (D-MA) to repeal key elements of the 2018 deregulation bill.
Khanna also pushed for the bailout in private. According to The New York Times, Khanna cornered top Biden aide Steve Ricchetti at an annual dinner of the Gridiron Club, a Washington tradition, and told him that the bank crisis threatened Biden’s record of achievements. “This is a massive issue not just for Silicon Valley, but for regional banks around America,” Khanna recalled telling Ricchetti.
But also on Tuesday, Teddy Schleifer’s Puck News tweeted about how Sacks and his wife were hosting a fundraiser for Khanna, scheduled for the end of the month. The price of admission ranged from $3,300 to $13,200.
In a statement to the Prospect, Khanna said that the event was organized before SVB’s collapse, and that it’s clear where he stands on SVB. “More broadly,” however, he said, “politics is about bridge building and persuasion. David [Sacks] and I have disagreements but we find common ground on cutting bloated defense spending, opposing the Yemen war, and the First Amendment. Having core convictions but engaging with those who see the world differently is so needed in our nation.”
Still, some observers argue that Khanna continuing to go along with the scheduled fundraiser with Sacks reflects poorly. As the Revolving Door Project’s Jeff Hauser told the Prospect, “While the Democratic Party needs to expand its reach and contest all winnable votes, there are limits to the support it should seek.”
Hauser added that Sacks’s previous support for Sen. J.D. Vance (R-OH) and Florida Gov. Ron DeSantis raised concerns about Khanna’s commitment to a progressive agenda. He continued: “That bailout-seeking bigots like Sacks are embracing Ro Khanna is a strong piece of evidence that Khanna’s progressivism is more performative than genuine. Khanna will have serious work to do to repair this wild error in judgment.”
Khanna tried to hedge his support for the SVB bailout by lyricizing about how the government should act just as swiftly for communities such as East Palestine, Ohio, and Jackson, Mississippi.
Furthermore, in his statement to the Prospect, Khanna suggested that fundraising with Sacks could spark a conversation for progressives to debate the merits of a Medicare for All system. The Prospect did not ask Khanna about his support for a universal health care system. Still, he said, unprompted: “If progressives want to get policies like Medicare for All passed, we have to make the case. Let’s have these conversations without compromising our convictions.”
It’s a strange move on Khanna’s part. It’s extremely unlikely that Medicare for All will find any traction during this congressional session. Legislation would probably have to pass to broadly assist East Palestine or Jackson, for that matter. And the Republican House is unlikely to do any of that.
By contrast, the venture capitalist bailout was something federal bank regulators did on their own. Khanna knew that they had this authority, and argued aggressively for it. Paying lip service to Medicare for All doesn’t change the fact that Khanna advocated for something that could be undertaken at a critical moment, which stands in contrast to his professed desire for accountability.
At best, the situation reflects a local member of Congress taking care of a core constituency, which would at least be an honest assessment of the situation. At worst, the call for Medicare for All is perfunctory sloganeering that bolsters Hauser’s concerns over Khanna’s commitment to seriously advocating and passing a progressive agenda.
Khanna likes to tout his independence from outside influences. He takes no money from political action committees and lobbyists. So it’s strange that as the tech industry has suffered blunder after blunder, he still sees it as wise to rub shoulders with the groups most opposed to government intervention. And when questioned about his motivations, he responds savvily about how his actions actually move forward progressive legislative goals.
