Sen. Mark Kelly (D-Ariz.) is taking heat for asking whether federal regulators had a way to work with social media companies to clamp down on disinformation that could fuel a bank run like the one that some say may have contributed to the collapse of Silicon Valley Bank (SVB) last week.
The exchange occurred during a Zoom call with members of both chambers of Congress, their staffers, and regulators on Sunday.
SVB’s demise rattled the financial sector. Regulators, politicians, and analysts are scrambling to figure out why the $200 Billion bank collapsed. Deregulation and interest rate increases are believed to have contributed to its collapse. It was also purportedly fueled by a bank run two venture capitalists frantically promoted on Twitter.
Rep. Patrick McHenry (R-N.C.) pointed to the role social media played in the rapid withdrawal of funds from SVB, more commonly known as a bank run.
“This was the first Twitter fueled bank run. At this time, it is important to remain levelheaded and look at the facts—not speculation—when assessing the right path forward,” McHenry, who chairs the House Financial Services Committee, said in a press release. McHenry also expressed confidence in the financial system.
Kelly’s question, first reported by journalist Michael Schellenberger, was reportedly during a call with the Federal Reserve, Treasury Department, and the Federal Deposit and Insurance Corporation (FDIC), and was based on fears that foreign countries could weaponize social media to target the financial system.
Rep. Thomas Massie (R-Ky.) told Schellenberger that Kelly “couched it in a concern that foreign actors would be doing this” but “didn’t suggest the censorship should be limited to foreigners or to things that were untrue.”
Massie said that regulators on the call essentially ignored Kelly’s question.
Rep. Lauren Boebert (R-Colo.) framed Kelly’s comment somewhat differently. Before his name was revealed, she tweeted that a Democrat had asked whether the government was “reaching out to Facebook and Twitter to monitor misinformation and ‘bad actors.’”
Kelly reportedly denied that he was calling for censorship, insisting that he was simply asking about foreign adversaries using social media to capitalize on such situations to spread disinformation.
The age of social media has coincided with increasing concerns over foreign countries and other bad actors using the internet to spread false information. Russia’s attempts to influence the 2016 presidential election forced this issue into the public eye.
Since then, there have been reports of homegrown troll farms and bots employed for similar purposes. Researchers recently uncovered a large network of United States-based Twitter bots dedicated to promoting former President Donald Trump’s 2024 campaign and deriding his political rivals.
It could be possible to use such networks to attack the financial system, such as by flooding social media with posts claiming that a particular bank or banks are about to go under, and potentially cause a panic like the one that engulfed SVB.
Given the libertarian VC community often aligns with Republicans, conservatives were quick to blast Kelly for asking about the government working with social media platforms to monitor or censor such content.
When someone suggested that Massie should’ve pushed back on Kelly in the moment rather than leaking his comment to the press, he replied sarcastically, “You’re right. I should have politely explained the basic principles of liberty to him and then he would have seen the error of his ways. Missed opportunity!”
A Twitter user who describes themself as a “1A 2A patriot” said that Kelly is “a traitor” and there should be “military trials.”
Republicans have long claimed that social media companies are in cahoots with Democrats to suppress conservative content. Though some believe both parties want to regulate online speech, conservatives widely viewed Kelly’s question as further proof.
Schellenberger, who broke the story, framed Kelly’s question as an example of “growing demands from Democrats for more censorship by social media companies.”
A popular right-wing Twitter user commented, “Arizona Senator Mark Kelly asked if social media companies can censor users to prevent bank runs. Democrat politicians aren’t even trying to hide their attempts to suppress free speech.”
