Politicians often dislike appearing foolish. In spite of this, a large number of Republican politicians responded to the failure of Silicon Valley Bank by ranting about “woke” banking in a manner that made them sound stupid to anyone who was truly worried about the threat to the financial system and the economy.

Republicans such as Florida Governor Ron DeSantis and House Oversight head James Comer are well aware that blaming SVB’s demise on identity politics would resonate with conservative media, a vital audience. The financial concern threatens to revive the genuine battle inside the party, but talking about companies’ supposed awakened preoccupations serves to conceal this fact.

Republicans are increasingly divided between conventional conservatives who support deregulation of banking and other businesses and populists who place the blame for their discontent on all institutions. A portion of the party has for some time favored populist discourse, which extols the average citizen and criticizes corporate America. Simultaneously — and frequently from the same people — an anti-regulation slogan remains the party’s typical response to many issues about how to effectively manage the economy.

The conflict reflects the divergent underlying interests of different groups within the Republican coalition — on the one hand, the small and large business interests that have supported the GOP for more than a century, and on the other hand, the white working-class voters who have shifted to the GOP, first in the South and then elsewhere, over the past several decades. It is difficult to find ideas or even slogans that appeal to both sides, and the more policy concerns revolve on economics, the more difficult it is to resolve the issue.

All of this precedes Donald Trump as the head of the Republicans. Remember that House Republicans rebelled against a Republican government during the height of the 2008 financial crisis, forcing President George W. Bush to scrabble for Democratic support to approve a crucial economic stabilization bill. Traditional Republicans had no trouble rescuing large firms and tended to assume that corporate backing was the greatest policy for all People. Yet, the majority of voters were not persuaded, and many Republicans in 2008 agreed with them.

In classic Trump manner, he took both sides. He amplified populist rhetoric against corporations, but also advocated deregulation of business at least as much as Ronald Reagan did decades before. A lowering of Dodd-Frank banking rules was one of the few legislative achievements during Trump’s two years as president of a unified Republican administration in 2017 and 2018.

As long as there is a Democratic president who accomplishes the real work of averting a full-blown banking catastrophe, diverting attention away from the rift within the party and onto the cultural war is likely to be effective.

Yet, Republicans will not be able to ignore the dispute indefinitely. The disagreement transcends the advantages of deregulation. The Republican Party is divided on immigration, aid to Ukraine, and several other matters. Republicans seeking the party’s presidential nominee will under pressure to disclose their positions. And if a Republican wins the White House, he or she will find that populist posturing is of little value once the heat is on them.

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