Failure may be an orphan, as the aphorism goes, but it certainly spurs a lot of people to assign paternity. The failure of the Silicon Valley Bank earlier this year is no exception. Almost before the story broke, Bernie Sanders and Elizabeth Warren, along with a slew of pundits who vote for people like Bernie Sanders and Elizabeth Warren, breathlessly blamed a 2018 law loosening the Dodd-Frank regulations on mid-sized banks, which Warren derided as “dangerous bank deregulation” in a New York Times opinion piece. A few weeks later an op-ed appeared in the same paper, with the tantalizing headline of “I Was an S.V.B. Client. I Blame the Venture Capitalists.”

On the other end, many conservatives pointed to SVB’s aggravating “woke” policies and insistence on ESG investments and other such nonsense. I’d be hard-pressed to dispute the argument that those policies were less than helpful, and may have contributed to diverting the banker’s gaze from the things that mattered, but that was no more the reason for the banks failure than the 2018 Dodd-Frank reforms.

Certainly it is not, as many on the left like to chant, a failure of the free market or the private sector. The private sector? Please. Not much more clearly delineates something as part of the public sector than a government guarantee. Irving Kristol, father of the neoconservative movement, wrote some decades ago it is one thing to criticize public welfare laws abused by opportunists, quite another to suggest if money is offered to someone whom the law technically qualifies to receive it, that that person will refuse it. Applied to banking, the Kristol law instructs us no depositor is going to shy away from putting money in an institution if that deposit is guaranteed by the government. Likewise, no banker can be expected to not invest in securities that government policies make attractive.

So what happened with SVB? Well, first, they assumed the Fed’s interest rate would remain at zero until the last echoes of Gabriel’s horn faded into eternity. SVB cut its teeth on being the bank for tech start-ups. When money poured into those start-ups – aided and abetted by the Fed’s low-interest rate lunacy which inflated valuations – much of that cash was deposited into SVB, and all those deposits added up; eventually, by some estimates, more than 90% of SVB’s deposits were over the insurance limit. To compensate, the bank bought up long-term treasuries and mortgage-backed securities, which the ultra-low interest rates made attractive.

But other things were happening too. Those ludicrously low interest rates and quantitative easing policies spurred profligate government spending (not that Congress or the White House needed much spurring) which created not-so-transitory inflation. Eventually the Fed did its job and raised interest rates to cool down the inflationary juggernaut. But that dropped the value of all those long-term securities SVB had bought. Naturally, the first depositors to hear the chime of that tocsin headed for the hills and took their deposits with them, leading to the collapse.

So who’s to blame? Well, you can’t blame the Fed for raising rates. That, lest anyone forget, is the Fed’s primary job. What they CAN be blamed for is for missing the obvious signs of trouble, or seeing them, doing nothing.

Nor can the 2018 banking reforms be blamed. That law emancipated smaller-and-medium-sized banks from the “Too Big To Fail” regulations under Dodd-Frank. SVB is touted as the 16th-largest bank in the nation; but the graduations between 1st and 16th are not even. SVB is about 6.5% the size of JP Morgan Chase. That ought not make it a vital pillar of the American financial system. In any case, the 2018 law explicitly gave the Fed authority to step in and reapply those standards if it saw a problem. Banking supervisors from the San Francisco Fed office did indeed flag SVB’s liquidity issues in late 2021 and 2022, and yet took no action. Why? Now THAT is a good question for a congressman to ask.

So, again, who’s to blame? In order of progressive responsibility: 1) the Fed, for keeping interest rates too low for too long; 2) SVB’s management, for epically poor decision-making; 3) the Fed, again, for failing to intervene when all the signs were there; 4) the president who decreed to guarantee 100% of the deposits; and 5) congressmen and senators who howl for more regulators and increasing the deposit insurance limit, rather then meaningful reforms like requiring all securities held by these institutions to be marked to market. Oh, and those who voted for the spending spree which created the inflation which kicked off this whole mess.

Kelly Sloan is a political and public affairs consultant and a recovering journalist based in Denver.