Rep. Andy Ogles, R-Tenn., a businessman before winning a House seat, said poor management, not governmental regulations, mainly contributed to the failure or closure of Silicon Valley Bank and Signature Bank.
"It was management that put [Silicon Valley Bank] in that position," Ogles said Monday on Newsmax's "American Agenda."
Ogles said it's not the job of the government to provide bailouts to companies that seek out "risky investments" or poorly manage assets.
"The role of government is to create a secure financial system," said Ogles. "Now, the question is, 'How far do we go in helping these banks or these institutions?' Only time will tell."
Ogles said Silicon Valley Bank was "essentially a 'climate' bank where it made risky investments."
Federal officials claim the assistance being provided to Silicon Valley Bank and Signature Bank won't affect taxpayers. However, Ogles noted his "concern" of that being a short-term occurrence.
Ogles' reasoning: The insurance funds that any participating banks pay into "will have an assessment that will ultimately be passed down to consumers. ... So, at a time of inflation, at a time of recessionary measures, what does that do to the long-term marketplace, and the competitive nature of the banking industry?"
Ogles warned that the government should "proceed with caution" and "beware of the unintended consequences" of helping keep banks afloat.
Ogles noted that the U.S. was built on free-market principles. It shouldn't feel compelled to rescue poorly managed banks or companies.
"Where does this stop? At some point, you're going to have draw a line in the sand" ... and say this is what's needed "to stop any form of contagion," said Ogles. "Beyond that, this is going to be a painful lesson for the marketplace, some of the investors and these banks."
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