9 months ago
When Silicon Valley Bank collapsed last March, Rep. Ro Khanna fought to rally Washington’s response to the economic calamity unfolding in his district.
Who’s the representative for New York Community Bancorp., the latest regional lender that’s alarming investors? The Office of the Third Congressional District of New York, recently vacated by George Santos.
The former Republican lawmaker was expelled from Congress in December after a series of scandals, including lying about his biography and being hit with criminal fraud charges. His district included Hicksville, New York, where NYCB is based.
"It's sad that they don't have someone that can work with them and for them because some folks just think they get to recall elections,” Santos said in an interview.
The downfall of Santos deprived the New York bank of a potential conduit in Washington at a critical moment. The lender is fighting to tamp down concerns among investors and policymakers about its exposure to souring commercial real estate loans. The struggle, playing out as its share price tanks, is reviving fears of broader banking system instability less than a year after SVB’s collapse. Others in New York’s congressional delegation are beginning to sound the alarm and trying to focus the government’s attention.
A spokesperson for the office formerly occupied by Santos said that “we don’t have any political say with this situation” without a member in place. The special election for the seat is Feb. 13.
To be sure, Santos’ influence was hobbled well before his ouster from Congress, raising doubts about how useful he would have been to the lender and its customers if he were still in the seat. Part of his embellished biography included claims about working for Wall Street banks.
Santos said his office had outreach to NYCB after he was elected but that the relationship was impacted as his scandals came to light. He said there was “always somewhat of a line of communication.” (The bank did not respond to a request for comment.)
“If I were there, I would be in [House Financial Services Chair] Patrick McHenry’s office and [Ways and Means Chair] Jason Smith’s office trying to figure out crafty ways that we can avoid another chain of events that took place in 2023,” Santos said, referring to last year’s regional banking problems. “There’s so many creative ways we can do it. I’m not saying government should be bailing out banks, but there’s ways we can do it to facilitate certain relief measures, and we should be working on it.”
Rep. Ritchie Torres, a Bronx Democrat, is trying to bring some urgency to the issue in the absence of Santos, including raising it with Treasury Secretary Janet Yellen at a Tuesday hearing. She’s expected to face further questions when she appears before the Senate on Thursday.
Torres argues that the fate of the $111 billion bank is a broader economic concern beyond the former Santos district. It’s an echo of last year’s Silicon Valley Bank collapse, when Khanna urged the government to intervene to protect its tech company customers and their employees.
NYCB has tried to reassure investors this week that its deposits are stable and it has resources to cover customers' uninsured cash. Its share price rose by more than 6 percent Wednesday after falling by 50 percent since last week.
“A failure at NYCB would destabilize not only the banking system but also the largest multifamily housing market in the country,” Torres said in an interview, referring to the bank’s role as a major housing lender. “It’s an issue that extends far beyond New York Three.”
Torres, a fierce critic of Santos, said it’s no problem that he’s gone.
“It’s better to have no representation than George Santos,” he said. “He was too distracted by his own scandal to focus on stability in the banking system.”
Jasper Goodman contributed reporting.
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