There are big banks, regional banks, community banks, niche banks, and … “woke” banks???
This week, a broke bank is a “woke” bank, which roughly translated means a ripe opportunity to blame its failure on everything Republicans don’t like — diversity, equity, and inclusi0n. (Shorter version: Republicans are against blacks and gays having seats on bank boards of directors.)
Silicon Valley Bank (SVB) was a niche bank that catered to venture capitalists and tech startups. It failed because of leadership mistakes, not a black or gay person on its board, which former Goldman Sachs Lloyd Blankfein called “laughable” as he called for more bank regulation (see story here). Its employees called their CEO an “idiot.” (See story here.)
But conservatives, egged on by the likes of Florida Gov. Ron DeSantis, who wants to be president, and Donnie Trump Jr. — who’s even dumber than SVB’s now-deposed CEO — are blaming the bank’s allegedly “woke” diversity policies. (See story here). Yes, that’s every bit as racist as it looks.
Republicans are dead-set against anything that helps minorities advance in corporate America (hint: talent still required). That’s “woke.” Given a choice between a black or gay bank director who knows what they’re doing, or running a bank into the ground, they’ll opt for white power. That’s their party’s core value now.
And Sen. Josh Hawley (R-MO), the “insurrection senator” who fist-pumped the Jan. 6 rioters (see article and photo here), ranted that “these SVB guys spend all their time funding woke garbage (‘climate change solutions’) rather than actual banking and now want a handout from taxpayers to save them.” (See story here.) So in his estimation, doing anything to stave off climate disaster is “woke,” too.
People who can’t get basic facts straight don’t deserve to be listened to. Diversity and climate change had nothing to do with this bank failure, and there’s no “taxpayer handout” involved in the Biden administration’s efforts to protect depositors. SVB’s assets likely will cover the deposits, and if they don’t the difference will come a fund paid into by the banking industry.
The Federal Reserve’s relentless campaign to tame inflation by steadily raising interest rates clobbered the market value of the mortgage-backed securities SVB was overinvested in. That left the bank with $1.8 billion of paper losses on $21 billion of bonds. (See story here.) When word got out, and it was the CEO who put it out, there was a run on the bank.
That’s because the FDIC insures only $250,000 of deposits, and many of SVB’s depositors were businesses with much more on deposit at SVB, who worried about their funds rushed to withdraw them at the first sign of possible trouble. Let’s say you run a tech startup, just sold $10 million of stock, and deposited the proceeds to your SVB account. Only $250,000 of that money is insured. What are you gonna do? Well, that’s what a lot of depositors did.
There was nothing wrong with SVB’s diversity policies, and climate change didn’t cause this. Stupid management decisions did. And where was the regulatory oversight? MAGA Republicans repealed it. (To be fair, some Democrats helped them repeal it; see story here.) Sen. Elizabeth Warren (D-MA) and other Democrats now want to reinstate those rules (see story here).
The moral of this story is don’t trust Republicans because they’re liars or stupid or both, and they turn everything into a political cudgel. We don’t need more politics, we need more bank regulation. You won’t get that from the ideologues who gutted the regulatory oversight that would’ve prevented this.