| Headlines over the weekend were dominated by the stunning fall of Silicon Valley Bank and Signature Bank, and the Biden administration’s efforts to contain the fallout. One of the questions now is whether it will be enough to avoid tipping the economy into the recession economists have been fearing for months.
It’s a question that hung over George H.W. Bush’s presidency more than 30 years ago.
Bush 41 oversaw the savings and loan crisis, where numerous savings and loan institutions collapsed as the economy cooled after the boom years of the 1980s.
One of the culprits of the S&L crisis was the Federal Reserve dramatically raising interest rates to try to combat inflation. Back then, the higher interest rates led fewer people to borrow money from their savings and loan institutions, reducing revenue and causing many of these institutions to go under.
In 1990, the U.S. dipped into its first recession in nearly a decade, and the soaring approval ratings President Bush enjoyed after the First Gulf War plummeted.
In his annual letter to investors published this week, BlackRock CEO Larry Fink suggested the current turmoil could eventually lead to the “slow roll” of bank closures during the S&L crisis: “We don’t know yet whether the consequences of easy money and regulatory changes will cascade throughout the U.S. regional banking sector (akin to the S&L Crisis) with more seizures and shutdowns coming.”
There’s plenty of other comparisons to make between Bush 41 and Biden 46.
Similarities
| Issue |
Then |
Now |
| Incumbent |
George H.W. Bush |
Joe Biden |
| Incumbent Prior Position |
Former VP |
Former VP |
| Approval Rating |
43% (Feb. 1992) |
42% (Feb. 2023) |
| Tax pledges |
“Read my lips: no new taxes” |
No new taxes for those making less than $400,000 |
| Tax pledge result |
Broken |
Depends on who you ask |
| Voters’ top issue |
The economy (NYT) |
The economy (Pew) |
| Inflation |
1990: 5.4%
1991: 4.2% |
2022: 8%
2023: 6% |
| War-Driven Oil Price Surge |
Iraq invades Kuwait
Oil prices rise 111% |
Russia invades Ukraine
Oil prices rise 44% |
| Bank Failures |
Savings and Loan Crisis |
Silicon Valley Bank and Signature Bank are the second and third largest bank failures in American history |
But there are some differences that could also spell trouble for the incumbent President.
Differences
| Issue |
Then |
Now |
| Incumbent |
George H.W. Bush |
Joe Biden |
| Voters identifying as Independent |
36% |
44% |
| Unemployment Rate |
1990: 5.6%
1991: 6.8% |
2022: 3.6%
2023: 3.6% |
| National debt |
1991: $3.2 trillion (60% of GDP) |
2023: $31 trillion (120% of GDP) |
| Foreign policy |
1991: Gulf War won in just over a month; 75% support the war, Bush’s approval climbs to 89% (NYT) |
2021: Troops withdrawn from Afghanistan. Only 54% support the move, 69% believe the mission failed (Pew) |
| Challengers |
Bill Clinton, Ross Perot |
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The flagging economy under Bush 41 became the rallying cry for Bill Clinton’s campaign – no one could argue “It’s the economy, stupid” wasn’t an effective slogan. But the failure of Washington to respond to the real pain American families were feeling also set the stage for independent candidate Ross Perot’s surprising surge to the top of the polls during parts of the 1992 race.
Here’s a Perot quote from 1992 to consider: “Our president blames Congress, Congress blames the president, the Democrats and Republicans blame each other. Nobody steps up to the plate and accepts responsibility for anything.” Sound familiar?
Turn up the Nirvana and pull on your favorite flannel, because it may just be the early 90s all over again.
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