Rep. Ro Khanna on Regulating Banks, TikTok, China, Ukraine & His Vote on the “Horrors of Socialism”
Written by GRB on 25/03/2023
This is a rush transcript. Copy may not be in its final form.
AMY GOODMAN: This is Democracy Now!, democracynow.org, The War and Peace Report. I’m Amy Goodman.
We’re joined now by the Democratic Congressmember Ro Khanna of Silicon Valley, of California, to talk about the banking crisis, the attempts to ban TikTok, East Palestine, and more. Congressmember Khanna recently joined Senator Elizabeth Warren, Congressmember Katie Porter and others to push for stronger banking regulations following the collapse of Silicon Valley Bank and Signature Bank. Khanna has criticized fellow Democrats who supported a 2018 bill that weakened Dodd-Frank, the landmark regulatory reform passed in the wake of the 2008 financial crisis. Executives from Silicon Valley Bank and Signature Bank were among those who successfully lobbied to weaken rules that may have prevented their collapse. Silicon Valley Bank is based in Ro Khanna’s district in California.
Congressmember Khanna, welcome back to Democracy Now! What needs to happen, not only with SVB and Signature, but overall? How can the regulations be tightened?
REP. RO KHANNA: Well, thanks for having me back.
We need to regulate large regional banks the same way that we regulate the Big Four banks. I remember when the Silicon Valley Bank executives were in my office in 2018 pushing for deregulation. I voted against that deregulation. I believe that the deregulation was a cause of the bank failure. You would have had liquidity tests. You would have had stress tests. Now, I know Secretary Yellen has said maybe those tests would not have captured the liquidity challenges with the rapid rise in interest rates. First of all, that’s a problem with the tests, if they’re not capturing that. But regardless of whether the tests would have captured that, it would have sent a signal to the regulators to pay more attention to what was going on in Silicon Valley Bank, and that would have prevented the gross mismanagement. Instead, what we said is, if you’re one of these regional banks, like Silicon Valley Bank, you have carte blanche to do whatever you want, without much regulatory oversight. It was a colossal mistake. We need to have those regulations back.
AMY GOODMAN: On Monday, ABC News reported the Fed was aware of Silicon Valley Bank’s problems, and they warned them. But what do warnings mean? Where are the concrete regulations? And what is your critique of the Federal Reserve and Jerome Powell?
REP. RO KHANNA: Well, the critique of Jerome Powell, with due respect, is that he missed the inflation early on, and then he’s gone from zero to 60 with very rapid interest rate hikes, that has created some of this challenge. Now, I don’t want to exonerate or excuse the bank management. They were greedy. They were in long-term bonds for a slightly higher interest rate with no hedge on it, and they had large, wealthy depositors with no diversification. So the first blame is with the bank executives. But the Fed’s rapid increase of interest rates contributed.
And the fact that the Fed had this warning without enforcement was a problem, but that’s because of the weakening of the Dodd-Frank regulations. Ultimately, in my view, it’s the Federal Deposit Insurance Corporation, FDIC, that’s supposed to be regulating these banks, and they would have much more authority if they had Dodd-Frank-type regulations.
AMY GOODMAN: So, you have the San Francisco-based bank First Republic in big crisis right now, being relegated to junk. And so you have a lot of people who are saying, “Well, we’ve got to just invest in the largest banks,” calling them the most stable. At the same time, you have a massive climate protest this week across the country where people are cutting up their credit cards to these banks because of their fossil fuel promotion. So, just asking — you are talking about shoring up community banks. How do you do that now? And how do you tell people that where they’re banking, if it’s outside the big ones of Citibank and Chase and Bank of America, are safe?
REP. RO KHANNA: Amy, we need to protect community banks, and you’re absolutely right; otherwise, all of the money is going to go into the Big Four banks. And that’s going to be bad for regional economic development or for some of the causes that you’re talking about, if the power is all consolidated with the Big Four banks.
The first point is, in the last 10 years, of the 73 bank failures, in almost all of them — I think in 72 or 73 of them — the depositors have been guaranteed. So, in our recent history, depositors are guaranteed. What I have said is that we should say that depositors in this country will be guaranteed, at least for the next year or two.
And how are we going to pay for that? We’re going to pay for that with a bank fee, a bank premium, and require accounts over $250,000 to have a mandatory fee to be able to pay for that insurance. Right now it’s basically like you’ve got these wealthy account holders, people who have $1 million, $2 million. I analogize them to uninsured drivers. They’re out there. They don’t have any insurance. If they cause harm, it’s the taxpayer that ends up doing the deposit guarantee. We ought to have a mandatory fee over $250,000 and then be able to guarantee those depositors.
AMY GOODMAN: So, as we talk about the horrors of capitalism right now, I wanted to go to your vote on the “horrors of socialism,” so-called. In early February, Republicans in Congress had a vote to denounce the horrors of socialism, specifically referring to it in that way. Congressmember Khanna, you were the national co-chair of a socialist candidate for president — right? — of Bernie Sanders, and yet, unlike AOC, unlike even Steny Hoyer, unlike Rashida Tlaib, you actually voted to support this, to the surprise of many.
REP. RO KHANNA: Well, that’s a fair question. I have always called myself an FDR Democrat. I have tried to make the case that Medicare for All, free public college, universal child care, a livable wage are policies that are not just just, but are — that are going to lead to economic growth, that are going to lead to entrepreneurship, that are going to lead to innovation.
Every time we talk about child care at $10 a day, the Republicans say, “Well, hat about Stalin? What about Lenin? What about Pol Pot?” And that is a rhetorical tactic that doesn’t solve people’s problems. What I have tried to do is frame progressive principles as consistent with the free enterprise system of the United States, as Hamilton, as FDR did. And that’s why I voted that way. But I understand that people also voted a different way, and I respect that vote.
AMY GOODMAN: I want to turn to TikTok. On Thursday, the TikTok CEO, Shou Zi Chew, was grilled by House lawmakers for over five hours on the app’s ties to the Chinese government, data practices, its effects on children’s mental health. The hearing took place just days after the Biden administration demanded that the Chinese-owned TikTok be sold, or else face a national ban in the United States. During his opening statement, the TikTok CEO, Chew, vowed to protect user data of American users. This is what he said.
SHOU ZI CHEW: We have heard important concerns about the potential for unwanted foreign access to U.S. data and potential manipulation of the TikTok U.S. ecosystem. Our approach has never been to dismiss or trivialize any of these concerns. We have addressed them with real action. Now, that’s what we’ve been doing for the last two years, building what amounts to a firewall that seals off protected U.S. user data from unauthorized foreign access.
The bottom line is this: American data, stored on American soil by an American company, overseen by American personnel. We call this initiative Project Texas. That’s where Oracle is headquartered. Today, U.S. TikTok data is stored by default in Oracle’s service. Only vetted personnel operating in a new company called TikTok U.S. Data Security can control access to this data.
AMY GOODMAN: So, that’s the TikTok CEO. Word is that the House speaker and Democrats and Republicans are going to put forward a vote to ban TikTok unless it’s sold to — I don’t know if it’s just an American or a non-Chinese corporation. Democratic Congressmember Jamaal Bowman of New York wasn’t in that hearing yesterday, but he’s been one of the sole lawmakers to defend TikTok. This is what he says.
REP. JAMAAL BOWMAN: So, we’re talking about free speech for everyday Americans. We’re talking about small business owners who use TikTok to grow their business. And my question is — and we’re going to pivot to the other part of the conversation: Why the hysteria and the panic and the targeting of TikTok? As we know, Republicans, in particular, have been sounding the alarm, creating a Red Scare around China.
AMY GOODMAN: So, can answer that question? You are now on the new Select Committee on China. Are we seeing a kind of convergence right now of an anti-China hysteria as well as this deep concern about protecting children, all of this brought out yesterday, but all being laid on TikTok? The Boston Globe has an editorial today saying that the answer is not going after TikTok but regulating these social media companies.
REP. RO KHANNA: Well, Amy, there are two different points. If we want to protect young kids and teenagers, absolutely, we need broader social media reform. One-third of American teenage girls have contemplated suicide. One of the causes of that is their addiction to social media, which is like the worst experience in junior high on steroids often. And so, I have called for having a standard that these social media platforms need to consider the harm to adolescents, and the FTC should be regulating them. They shouldn’t be able to have algorithms that get people addicted or that cause mental or emotional harm. That has to be broad-based on all social media.
But TikTok genuinely has separate concerns, and there are two concerns. One is, frankly, reciprocity. China does not allow Twitter, Facebook, Amazon, Google, YouTube — any American company — to even have the slightest entrance into China. So, if we’re going to have trade, there has to be reciprocity of trade.
The second point is that there is evidence that TikTok, while they have not compromised American data, have had Chinese CCP officials in the app and prioritized or deprioritized information about human rights with the Uyghurs, prioritized or deprioritized information that the Chinese Communist government wants about sensitive human rights and other issues. What if the Chinese Communist Party were to do to TikTok what they did to Jack Ma or other tech leaders in China? I think those are legitimate concerns. That is not hysteria. I have affirmed the One China policy, and I’ve said that we need to be tough on trade but also still have dialogue. But it seems to me an unnecessary risk to have the CCP have control in any way over ByteDance and TikTok.
AMY GOODMAN: You recently traveled to Taiwan, where you met with the Taiwanese president, Tsai Ing-wen. How concerned are you that these congressional visits could further escalate tension between the United States and China, and also the United States pledging hundreds of millions of dollars of weapons to Taiwan at the same time President Biden is drawing a line in the sand when it comes to China militarily supporting Russia in the Ukraine war?
REP. RO KHANNA: Well, it depends on, I think, what members of Congress say when they go to Taiwan. I was struck that the president of Taiwan, President Tsai, and the KMT, which is more sympathetic to the Chinese mainland, and the TPP all had converged on a simple policy. And that is, they wanted Taiwan to be prepared for its defense. The Taiwanese have moved conscription from four months to 12 months. They wanted aid with defense from the United States. But at the same time they recognized that 40% of Taiwanese exports are to the mainland of China, and they wanted an affirmation of the One China policy, which is that the situation between Taiwan and China should be resolved through peaceful dialogue between both parties and an affirmation of the status quo. And my view is, as long as we operate under that framework, as long as our policy is not getting ahead of Taiwan, then we can still have peace in that region, while being strong and standing up for the values of democracy and freedom that Taiwan represents.
AMY GOODMAN: Let’s go directly to the Ukraine war, but on Capitol Hill. A peace activist with the group CodePink repeatedly interrupted the U.S. Secretary of State Antony Blinken Wednesday as he testified before the Senate Foreign Relations Committee. This is CodePink founder Medea Benjamin.
MEDEA BENJAMIN: The American people don’t want to keep fueling a proxy war with Russia that could lead us to World War III or a nuclear holocaust. You’re supposed to be a diplomat. Start negotiating! You know, if you don’t like the Chinese proposal, where is your peace proposal?
AMY GOODMAN: So, that’s peace activist Medea Benjamin. If you could respond to what she’s saying? Where are the negotiations? China has put forward a peace plan. Where is the Biden administration peace plan being put forward? Do you think the Biden administration is doing enough to find a way to negotiate an end to this war?
REP. RO KHANNA: I actually respect both what President Biden and Secretary Blinken have done to mitigate the risks of nuclear war. The president has been quite judicious in not wanting to escalate tensions with the Soviet Union. When Putin was threatening nuclear weapons, the president did not respond in kind. He has been cautious, criticized by Republicans on the Hill in not having weapons to Ukraine that would be offensive, that would have any risk of getting into Russian territory.
Where I think China has missed the opportunity for global leadership is they have still not denounced Putin’s clear aggression and war in Ukraine. I mean, they have no legitimacy, in my view, to offer a peace plan if they are unwilling to say what Putin did was wrong. And if Xi Jinping is meeting with Putin over 40 times in the last decade and saying, “He’s one of our closest friends,” and unwilling to criticize what Putin did, that does not give them much of a moral legitimacy for a peace plan.
I think where we should have a peace plan is clearly saying that Putin was wrong, it was unprovoked. We want to have the territorial sovereignty of Ukraine and stand up for Ukraine, but we need to have at the same time dialogue. And you may have countries like India or others that could be better brokers. Now, India at least has condemned Putin’s invasion. But my view of it is that we have to support Ukraine, while working at the same time to keep the channels of dialogue open to have some just peace. And I was fine and supportive of Secretary Blinken meeting Lavrov with India. We should continue the dialogue, while saying that Putin was clearly in the wrong in this case.
AMY GOODMAN: Finally, we just have 30 seconds, but President Biden has approved the massive ConocoPhillips oil and gas development in Alaska, the $7 billion Willow project expected to produce 180,000 barrels of oil per day, adding some 240 million metric tons of greenhouse gas pollution to the atmosphere over 30 years. You’re a congressmember from California. You certainly know the effects of the climate catastrophe, and not just in California, in Malawi, in Madagascar, all over the world. Your response to this approval?
REP. RO KHANNA: It’s a colossal mistake by the administration. It is a carbon bomb. There is no justification for it. It’s undermining the very goals of the Inflation Reduction Act, the largest climate package. It is going to be alienating young voters, the very voters that admired the president’s work on climate and on student debt relief. I have advocated very strongly, as have many progressives, that this is just a wrong decision, it’s a mistake, and it sends a horrible message to young voters and climate activists around the country.
AMY GOODMAN: Silicon Valley Congressmember Ro Khanna, congressmember from California, deputy whip of the Congressional Progressive Caucus, as well as on the House Select Committee on China, thank you so much for being with us.
REP. RO KHANNA: Thank you.
AMY GOODMAN: When we come back, investigative journalist James Bamford reveals how Israeli Prime Minister Benjamin Netanyahu clandestinely tried to help Donald Trump get elected in 2016. Why don’t we know more about this? Stay with us.