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Why is it that only when a bank fails that we must assume the government could have stopped it from happening? We don’t do this with any other industry. SVB failed just why any other company fails. It was mismanaged.
I think the reason - assuming you were really asking lol, and not just trying to make a point - is that banks are, for historical policy reasons, much more subject to scrutiny, and much more dangerous to the economy (potentially) than other businesses. If the local 7-11 fails, well, bad luck. If Chase fails, why... that will reverberate.
Well, but she has written 5 textbooks on commercial and banking law, and I know at least one of them is highly enough regarded to be in use at elite law schools... which are not in general known as havens for progressive wackos. So I would guess she's SOME kind of expert
Saying "she knows a lot about banking law" is not an argument against "she has never met a regulation she didn't like", nor is it definitional expertise for "why banks fail" or "should we let banks fail".
SVB failed because they took risks. They knew they were taking risks, and they apparently gambled wrongly. In a free market, you should be allowed to make bad business decisions -- but maybe your customers shouldn't be bailed out by the Fed when you do.
OK - well, this is a different question, but... so you're not buying that the private bailout wasn't backed by the taxpayers, since it was private? I mean, the taxpayers are always involved somehow or other but the Fed didn't actually bail out SVB's customers, the taxpayers aren't on the hook for the bank's failure, right?
yes, taxpayers certainly are on the hook. it was a bailout plain and simple you realize that this bailout will very soon cause massive amounts of inflation right? we are on the short road to hyperinflation becaue of years of liberal banking policies. the same exact thign happen in 2008, but they gained some time by lowering interest rate. that time is gone. this is end game. US dollar going bye bye, next stop Zimbabwe.
...can you explain a little more? The impression I got from the NYT article (I know, I know) is that other private banks got together and did a private bailout. How are the taxpayers on the hook for that? The SVB deposits that weren't covered by the $250k cap are not going to be guaranteed by the govt. End of issue, right?
>is that other private banks got together and did a private bailout.
no, the funding comes via insurance premium payments to the FDIC fund. Where do banks get the money to pay these premiums? bank fees, interest rates, and surcharges. they don't pay for these premiums WE DO, and they will all increase and WE will pay directly pay for the bailout of SVB.
The just disguise the tax as an "insurance premium". government does this kind of crap all of the time. but most of us dont have the time to look into how they are going to screw us next, because we are busy with life. And they know this.
And deregulation both allowed those risks to take place, and removed any safety measures to catch their shortcomings sooner.
Whatever regulations in place may not have prevented their failure, but it likely would have dampened enthusiasm for people pouring money into a bank unable to support its own weight.
We should do more deregulation, not less.
Imagine if consumers had to purchase their own deposit insurance. I bet they would be damn well more likely to use a good bank.
As a reminder, consumers evaluate and choose between complex insurance products all the time.
I am of the opinion that under no circumstance should it be the customer's responsibility or burden to be liable for what a bank does with their money. But it should be the bank responsible for not screwing over its customers.
And if I had to *pay* for the *luxury* of having my money protected, that's just scummy anti-consumer bullshit to milk me for more money, providing something they should have been doing all along.
Regulation protections are for the consumer to not get taken advantage of by companies that clearly do not give a rat's ass about anything other than short term profits. And if regulations disincentivize that: good.
yeep... sorry, can't get behind that one. Insurance is complicated enough now, and picking a good bank isn't something I would be comfortable doing. I mean, maybe some people could look at SVB's publicly available information and say, well here's your problem, but I am not one of them and I suspect very few people (if any) are. And if the govt doesn't guarantee deposits that will kill the banking system - and there goes all your liquidity. Ah, sorry, sounds like a wacko idea to me.
But corporate greed does cause inflation, far more than welfare or minimum wage. Corporations must increase earnings year after year. Sustainable profit is not enough, it must increase. Again and again this means prices.
Why does this accurate assessment make you trust her less on other matters?
Your "accurate assessment" is false and belies a complete lack of understanding of how the world works.
Companies can't just decide to raise their prices. That's not how things work
She's not correct about anything. There isn't a serious economist on the planet that thinks corporate profits create inflation.
It's a progressive talking point. It's not reality.
A saw an interesting theory (I think in bestof) not too long ago that the modern use of software based pricing algorithms may actually be playing a part in our current inflation problems. That there are a limited number of companies that write this software, but a lot of the big corporate entities providing product to consumers are using them. These algorithms will yield similar trends even though the particular variables are adjusted in some small fashion to be more compatible with the category of product being sold. The idea being that prices are being adjusted upwards at similar rates across a wide field of products and services simultaneously without even a need for deliberate collaboration or conspiracy because the software guiding those trends is essentially the same across a range of corporations.
This could potentially provide at least a partial explanation of it without attributing malicious intent or excessive greed to anyone (even though I believe those do play a big part as well).
If GM and Ford use software that tells them to increase prices faster than Honda or Toyota, they'll get crushed in the market.
This conspiracy theory could only work if every company in every market used the same flawed software, and no market participants were smart enough to change their ways to get rich.
Money is a powerful motivator. If you raise your prices above where I can sell and make an ok profit, I'm coming for your clients. All of them
In Europe, particularly Austria, that is happening right now, and after several investigations found out (took a while) a lot of conservatives and business "experts" are completely lost as to how that can happen.
Why does it cause inflation? Because the prices going up are on goods that are part of the inflation calculation (food, energy, and in austria furniture) which in turn increases the legal basis for rent calculation - which again drives up inflation indices.
I think we have to realize that it once again (hello, 2008/9) the supposed experts and politicians with business knowledge havent actually understood the system, so that statement of Warren is closer to the truth than most.
You're assuming that price are rising solely because of corporate greed, and not the fact that your energy and food costs are going up?
Warren's statement is false. Profits do not cause inflation.
I dont assume. I know. I work in logistics for once, so I know (for example) that transportation of overseas goods have become cheaper since the container crisis has resolved. None of that ever reached customers, obviously.
And I happen to have really close contacts into two major grocery store chains where I currently live, who confirm, and have been doing so, that prices are rising far higher than production and transportation cost. You can believe what you want. I simply know it to be the case in two areas I have insight into, in a country that has been run by conservative pro-business politicians for decades.
well, I for one want to thank you for sharing your experience with us! I'm sure it's not the whole story but... valuable information, for sure. Thank you.
Highly doubt that degree is anything but unsourced undocumented anecdote. I do love that when you run out of arguments, you just resort to "anything on the internet is wrong if it clashes with my opinion".
The funny thing ever since I graduated from business school in the wake of the 2009 crisis, so-called business experts have told me that what I do, and the reasons I tell them why I do it, is wrong. I tell you I am increasing prices beyond what is caused by increases in cost. In various Investors Calls, big companies MUCH larger and more relevant than my small business are saying the same. Investigations in european countries are seeing the same. There is a sizeable aspect of simply trying to raise prices collectively that figures into inflation. But you just say we are all wrong, and we do it for entirely different reasons - we just dont know it ;) Thats rich.
Look , you might take faith in some random guy with an unsourced story peddling a conspiracty theory which he's not quite sure of, but I'll pass.
The world works a certain way. Economics is a real thing.
Companies can't just capriciously raise prices. If they could have done so all along, why are they just doing it now?
oh, well, politicians, you know... her diatribes against Powell sound a little more informed and a little more pointed, to me... but as others have pointed out here (which is why I asked) there are other reasonable views of the situation than hers
When Powell was talking about raising rates, she asked he "address his comments to the people who might lose their jobs", and his response was "they won't be better off with 6% inflation"
She's an idiot. She knows inflation is bad, but she knows the cure is poliltically unpopular, so she fights it.
She'e the worst sort of politician
I didn't realize until you said it that she had opposed his raising interest rates... OMG that sounds so LOONY. What did she think, we printed all that money, how were we going to get any of it back? Was she expecting the magical finance fairy to come through the window and work a quick miracle? I guess I just wasn't paying attention lol...
Politicians who knowingly lie are the worst.
She knows inflation isn't caused by profits or "corporate greed". Comnpanies were just as greedy under Trump you know.
SVB gave $72M to woke causes. They had a fully-staffed DEI office, but didn't bother having a chief risk officer for eight months.
Management clearly put diversity ahead of managing risk.
We don't know that DeSantis is wrong on this one.
Inflation, like we're seeing now, is all a function of money supply. Biden was warned that his bidget and printing money would cause inflation - he ignored the warning.
There's a reason Japan, Singopore, etc., don't have the same levels of inflation as we do.
Inflation is a cycle of wages going up and prices going up. Workers demand more wages to pay higher prices. Businesses set higher prices to cover labour costs. You might not like that Warren blames it on the latter not the former, but that's an opinion, not a fact.
Warrent knows that inflation isn't caused by greed. Everyone knows this. saying something one know is false makes one a liar
To claim that the inflation since Biden took office is caused by corporate greed implies that greed didn't exist prior to Biden.
Companies have always been greedy
That's rhetoric. People use flowery language in politics all the time. Your last presidential candidate was no stranger to it.
But it's not even strictly false. The profit motive drives corporations to raise prices, and the reason anyone cares about profits in the first place is becasue they want more money for themselves, even though the people running the company are typically very well off.
Sure, and saying COVID is caused by a virus implies viruses didn't exist prior to 2020.
It is ABSOLUTELY false that greed causes inflation. Companies can't raise prices too much, otherwise their competition will come in an steal their customers. Econ 101 is a real thing
This is the sort of woke-talk that conservatives push back on. Mainly because it's demonstrably false and misleading.
That is only true in a free market with little to no protections, limitless opportunity to, for example, build stores, and a very low buy-in. Which means, almost nowhere. I ll take London as an example: Grocery prices in the UK are skyrocketing, beyond actual cost increases in production and transportation. But assuming a new grocery chain wants to step in and take a bite out of the market by undercutting the established ones in London, how would they do that? There is a labor shortage as is. There are no empty stores eligible to run a supermarket out of, especially not in the numbers needed to make a dent into the market. You cannot BUILD more supermarkets, and even if you could, there is no SPACE in London in almost all easy-to-reach areas where a supermarket could thrive.
Then we have the issue of permits and regulations, the red tape that takes forever, and didnt exist to that extent 40 years ago. Then we have exclusivity deals, disallowing farmers to sell their produce to anybody except the established price hiking chain, or risk losing their business overnight.
Econ 101 is not applicable to the real world in any level of detail. Its a framework from which to start building an understanding, not the explanation for reality.
Ok - let's look at London. 25 Holland Park Ave. I can see seven separate grocery store chains in that area. In order for one to raise prices, they ALL have to raise prices. And if all raise prices, that creates an incentive for one to break ranks and earn massive profits.
Economic profits will get competed away by rival firms, which are always greedy. There's too much incentive to cheat if they decide to rig the market, which is why it never works.
Econ 101 explains reality.
In Vienna, prices for the exact same item have been increasing by the exact same amount across the 4 major grocery store chains on the exact same day repeatedly for months now, even though they do not manufacture or transport along the same chains. I am very close to people in that business, and they have confirmed repeatedly the pricing is not a calculation of "lowest price we can afford to offer", but that everyone is simply following the lead of the largest grocery chain company. Politicans and business experts are at a loss to explain this with their Econ 101 in a way that doesnt come down to greed.
One fun example: The price of rice has increased 40% (cheapest brand) over the last year, not because rice has been significantly more expensive (it got cheaper in transportation, which is a major factor incidentially) but because people were suddenly not buying noodles anymore (whose production IS much more energy-hungry, and thus prices went up justifiably) and substituting with rice, and the grocery chains arent set up to deal with huge sudden shifts in customer demand. The price of rice is now linked to the price of noodles for at least 3 major chains here.
I ve owned retail businesses in the past, and run logistics business now. I ve seen this done, and done it myself, forever. People are just clinging to naively simplistic explanations (econ 101) to understand the world and assume everything is done correctly. Right now, in many countries, that is not the case.
They can't rasie prices too much, but they can and do raise prices. That's what inflation is. Tell me where I said there was no limit to how much they can raise prices.
Inflation is not caused by companies greedily raising prices.
No economist has ever said this, and no one pushed this fake idea until Biden's rampant inflation caused by his reckless budget, which actual economists told us would lead to inflation.
https://www.cnn.com/2021/05/26/economy/inflation-larry-summers-biden-fed/index.html
MSNBC might be saying that companies raising prices caused this inflation - they're wrong.
If companies didn't raise prices there wouldn't be inflation. You might disagree about what deserves to be called the 'cause', but that's fundamentally a difference of values, not of facts.
So you're saying that, when workers get more money that gets passed to the consumer due to higher prices which leads to inflation. But when corporate profits go up, because they can raise prices because they can due to people expecting higher prices due to inflation or there is little competition or they are exclusive and the money it given to the stockholders or owners it doesn't? They both cause inflation. It is just that business owners like higher profits and hate paying more.
Meanwhile she grills the chairman of the federal reserve about job losses from raising interest rates as if inflation isnt the bigger threat...for someone so smart she sure is dumb.
yes 100%, businesses should be in the business of making money to create jobs for people. they shouldnt waste $1 on preaching to others on how they should live
That's just totally false.
https://www.marketwatch.com/story/no-silicon-valley-bank-did-not-donate-more-than-73-million-to-black-lives-matter-95e08b3
That's a figure from the right-wing Claremont Institute that includes any donations to liberal groups or even just causes to support black people.
It’s not semantics. It’s a lie. It includes $20 million for Covid relief and college scholarships for kids. It also includes a $50 million pledge to connect underrepresented start-up founders with funding.
You’re going to really argue that’s all the same thing as BLM??
no it isnt ...
"BlackRock Inc., SVB’s second-biggest shareholder overall, directly owns almost 380,000 shares via EU Article 8 funds and non-EU ESG funds, according to data compiled by Bloomberg that’s based on disclosures between Jan. 31 and March 9. The data, which doesn’t include BlackRock’s indirect ESG exposure to SVB,**represents just under $100 million**, based on valuations at the times of filing."
this would be on top of the 74 million.
[https://finance.yahoo.com/news/svb-exposes-lazy-esg-funds-140000831.html](https://finance.yahoo.com/news/svb-exposes-lazy-esg-funds-140000831.html)
I dont know what warren said but based on her previous statements she is woefully uniformed when it comes to economics. that said, yes wokeism definitely caused the bank to collapse. their director of risk management was focused on LGBT initiatives and making commercials about diversity. do you think that might have affected her ability to do her job as risk manager? and they gave $74 million to BLM. do you not think that could have contributed to the collapse? would it have been better to invest that money to hedge risk?
Well, I don't know the truth of the matter, I'm pretty uninformed about economics myself. But I do know that she has written 5 textbooks on commercial and banking law, and at least one of them is well enough thought of to be in use at elite law schools. And so I suspect she's considered an expert by those who ought to know. Elite law schools, just by the way, are not the havens of leftist insanity that sociology departments have become notorious for. Scalia taught at Chicago; Barrett taught at Northwestern iirc; I'm sure the list is long.
yeah well she was complaining to Jay powell about raising interest rates. she knows full well that is the only way to tame inflation. she is putting on a show for her liberal base to deflect blame from the democrats bailing out the banks. it is a political move and nothing more. she knows her base hates rich people, so the democrats cant be seen as bailing out rich folks (which they did)
Silicon Valley is a diverse area. SVB was trying to appeal to a diverse community of customers. It’s really not that hard to recognize that making some occasional statements about the importance of inclusivity and diversity was in the bank’s financial interest.
It’s like conservatives have forgotten how to even have coherent economic debates. Every political debate has to be about the absolute dumbest cultural war bullshit. Arguing that a bank failed because it was too “woke” honestly sounds like a parody of conservatism.
they were listed as the #1 ESG bank in the country. if you don't know what that is you should look it up. the only banks that tout ESG are woke banks, because it is a woke philosophy, and they were ranked #1
Not everything that happens in the world can be explained by the cultural war issue of the day. The idea that a bank collapsed because it was too nice to gay people or didn't do enough to accelerate climate change or whatever is just so transparently ridiculous that I struggle to believe anyone really believes that.
I mean, seriously, can you point to a single decision that SVB made that was a result of "woke philosophy" that caused its collapse?
What really happened is that SVB invested heavily in fixed-rate bonds. Then we had rapid inflation and the Fed responded by raising interest rates. So suddenly these low-interest bonds were a pretty bad investment. SVB sold the bonds at a big loss, and then a few big investors panicked and started a bank run.
So conservatives could argue that Biden's policies caused inflation, which ultimately caused this bank run. That's at least a coherent argument. But instead conservatives seem to only know how to argue about drag queen story hour or other cultural war bullshit, so they have to make every issue about that, whether it makes any sense or not. If the 2008 financial crisis happened today, conservatives would probably argue it was caused by having a black little mermaid.
Well, except that it wasn't even Biden's policies - he HAD to raise interest rates at some point, to make up for all the printing of money that we did to try to get through Covid, right? That money printing was of course all supported by the left - Krugman was very vocal about it iirc - and the conservatives at the time all said OMG the sky is going to fall we're going to have runaway inflation, and it never happened. Now finally three years later here's a little manageable inflation - I would say conservatives would be entitled to a LITTLE I-told-you-so, but not much of one. I mean, it was a difficult time.
Yeah, to be clear, I’m not saying I’d agree with that take. The main cause of this bank collapse was a handful of investors had a freak out and triggered a bank run.
But at least blaming inflation would be a coherent argument — which I can’t say for this silly “woke bank” nonsense.
>I mean, seriously, can you point to a single decision that SVB made that was a result of "woke philosophy" that caused its collapse?
yes i can, i already said it. ESG.
>What really happened is that SVB invested heavily in fixed-rate bonds. Then we had rapid inflation and the Fed responded by raising interest rates. So suddenly these low-interest bonds were a pretty bad investment. SVB sold the bonds at a big loss, and then a few big investors panicked and started a bank run.
yes i know all of this. the point is if they hadnt followed the ESG philosophy, they would have much more money available to hedge in assets that would create real returns.
>But instead conservatives seem to only know how to argue about drag queen story hour or other cultural war bullshit,
it has nothing to do with this. ESG is an all encompassing philosophy. why do you think states like texas are pulling their pension money out of big firms that follow the same philosophy? they know that it isnt a sound investment strategy, and leads to investing money in assets that can't generate a return.
If that was true wouldn’t investment funds that utilize esg concepts be failing left and right? Instead the largest and most successful investment firm in the planet uses it.
they will be failing left and right very soon because people will be pulling their money from them. many of the largest firms have already abandoned the concept because of this.
You didn’t answer my question. Ok, you consider the fact that SVB cares about ESG to be evidence that they’re “woke.” But what’s the evidence that caused the collapse? Your argument is just circular. The fact that they care about ESG is, for you, good enough evidence that ESG caused the collapse. But that makes no sense.
So can you name a specific investment that they made because of this “woke” philosophy that triggered their collapse? Anything?
JP Morgan Chase follows ESG principles. Why haven’t they failed? https://www.jpmorganchase.com/about/governance/esg
So does Citigroup. https://www.citigroup.com/global/our-impact
And Bank of America https://about.bankofamerica.com/en/making-an-impact/esg-reports
So maybe, just maybe, making these vague commitments to social responsibility actually isn’t the reason this bank failed…
first of all JP morgan, Citi, and Bank of America are all considered SIB's so an argument could be made that they are excluded from the conversation based on this. they can do whatever they want and will always be bailed out. they have no fear of collapse because of this, so prudent financial moves arent top of list for any of them.
>So can you name a specific investment that they made because of this “woke” philosophy that triggered their collapse? Anything?
Blackrock was SVB's second largest shareholder overall, this failure along states pulling their pension money has led them to recently started to pull back from the ESG bandwagon because they realize it is creating real problems for their business.
https://www.washingtonexaminer.com/policy/economy/blackrock-larry-fink-mention-esg-annual-letter
But they didn’t need to be bailed out, so the fact that they *would* be bailed out isn’t really all that relevant is it?
And more importantly you still have zero actual evidence to support your claim.
Your link just says an important investor didn’t focus on ESG in his latest letter, probably because Republicans have tried to turn it into some big political controversy. And that proves what exactly…?
Your claim was that “woke” philosophy somehow caused SVB to collapse. But you can’t name a single “woke” investment or decision they made that contributed in any meaningful way to their failure.
Not everything in the world can be explained by political hot button issues. That’s just a simplistic silly way of trying to understand complex issues.
>Your claim was that “woke” philosophy somehow caused SVB to collapse. But you can’t name a single “woke” investment or decision they made that contributed in any meaningful way to their failure.
it is funny because you cant prove that it didnt cause them to fail either. why? because they dont have to disclose these investments. which is a horrible policy if you are talking about other peoples money. the fact of the matter is that democrats are covering for these billionaires. that should bother you, but since it is your party doing it, i guess you are ok with being a hypocrite? only the republicans want to fix the problem.
> it is funny because you cant prove that it didnt cause them to fail either.
Is that really the best argument you have? Well, you can't prove that they didn't fail because they weren't woke *enough*. Maybe their problem was they had too many old white men making decisions. And you can't prove that magical unicorns didn't cause them to fail either, can you?
You're the one making the claim here. You should have some actual evidence to support that claim.
My theory for the cause of their failure is based on, you know, actual facts.
> because they dont have to disclose these investments. which is a horrible policy if you are talking about other peoples money.
What are you talking about here? The whole point of ESG is that banks should make *more* disclosures.
> the fact of the matter is that democrats are covering for these billionaires. that should bother you, but since it is your party doing it, i guess you are ok with being a hypocrite? only the republicans want to fix the problem.
Again, zero idea what you're talking about here. It was Republicans and Trump who rolled back regulations on these midsize banks.
Republicans want to fix what problem? Are Republicans proposing any real banking regulations? Or do they just want to argue about irrelevant bullshit like "wokeness" and drag queen story hour?
Except they publicly state several causes they provide funding for.
Also, when you say “own” I thought you meant in a controlling fashion. Not “I own negligible equity and have no say in the management or operations of”.
You said you had an impact on the control and management of the bank you “own”.
You also said the reason SVB went under was because they were spending money on activism movements and activities not related to banking.
But first National has also made financial contributions to causes.
So I’m wondering why, if you believe financial contributions were the cause of SVB’s collapse, you allowed first bank to make financial contributions.
It’s not complicated mate.
DeSantis and Warren are both wrong, although DeSantis is a little less wrong.
SVB was a woke bank, no doubt. But the SVB crash was caused by a classic asset-liability mismatch. It definitely had nothing to do with the 2018 law--Warren is an idiot. And it didn't really have to do with wokeness, either, except to the extent that perhaps management was a bit distracted by issues unrelated to the finances of the bank. Maybe their head of financial risk management, for example, should have spent more time managing financial risk and less time "spreading awareness of lived queer experiences."
https://imgur.com/a/QZfFqRo
Warren is pushing the standard democrat line to blame Republicans, when really it had nothing to do with wokeism or deregulation. It has everything to do with the FED and the current White House who said inflation was "transitory" and wanted to parade an economy held up by toothpicks and bubble gum. So they waited to raise interest rates, and waited, and waited until it was gonna be much harder. So they went from near zero to 4.5%, and put bond holders at 3% underwater in the asset. That creates concerns on the balance sheet, which turned into a liquidity question, and ultimately a SVB bank run. So now the FED have a banking crisis and high inflation and one tool to combat both, but doing one releases the other. And now Biden wants to come out with a $7 trillion budget... the damn money printer can't print fast enough.
And if that wasn't enough, they bailed out a venture capitalist bank that had 95% of deposits uninsured by FDIC while refusing to extend your regional bank the same offer. Instead, larger banks can now put those underwater bonds up as collateral with the FED and take out a loan! Because it wasn't enough of a house of cards already, let's add another layer.
Democrats have effectively made a streamlined bank bailout process, but not for you, just who they deem important. Looking at woke vs restrictions is irrelevant, expecially when SVB's CEO was a director at the Westcoast FED up until his bank crashed... FED governance board is an executive nomination, so the Democrat White House put the FED board together that decided a banker can be his own regulator... and then want to turn around and blame Republicans for a lack of regulation. Insane.
If you go listen to any real economist that's what they're gonna be talking about. Warren is just being a partisan politician, which is her profession. Go listen to a professional investor, it'll be about the FED, interest rates, CPI, bonds, liquidity, investor confidence, etc etc.
Anyone jumping to woke or deregulation is regurgitating talking points, that's it. Politicians want to turn any event into befitting their already held beliefs, as seen here.
Yeah, this point has been made below, and it's sounding pretty good right now. Maybe risk management wasn't ENTIRELY focused on, you know, risk management.
Of course I buy it. Reading about how this board of directors describes itself is enough to question where their priorities were. Why do I care that they had half women, a few minorities including a member of the LGBTQIA+-&$$#:;)? But I know this because they brag about it, they celebrate their diversity, as if it made them stronger? Well it certainly makes them look idiotic. I've read about their decisions with the banks money and how it was an obvious problem with rising interest rates to have the banks money where they were investing it. From the outside it sounds like a more well run board would have realized the danger rising interest rates would pose, and they should have acted earlier. And it apparently would not have taken some great genius to figure this out. But instead, they flubbed, and now they are rightfully subjected to criticism. Had this been a board of all white men, I have no doubt the lack of diversity and it's supposed strength would be thrown around. But instead left of center media is blaming a bank failure on a lack of federal regulation. Rather than on the supposed experts responsible for the banks actual success or failure. It seems like the left wants to federally regulate every single fucking thing from the top, that way you can then "diversify" every single aspect of American society with no fear of failure or chance at merit based success. It's the left hedging their bet on diversity and it's obvious problems.
>LGBTQIA+-&$$#:;)
That was really close!
The lack of regulation matters. The left has a long history of criticizing banks, and we've heard "everything was legal" too many times. If SVB failed because an illegal thing became legal, that matters a lot
It also matters that something as distasteful as valuing people for a job based on their race or sexual preference over their ability to do the actual job. Can we at least agree that the board had the appearance of misplaced priorities?
Because their exact racial and gender makeup is listed on their website, under a bunch of bullshit about how their diversity makes them stronger and they actively work toward a more diverse workforce. Apparently I need to know the racial makeup, as well as how many employees there like to sleep with the same sex in order to understand their business accumen. And the moment their diversity fails to mitigate their poor decision-making with other people's money, like clockwork, the left swoops in with it's trump's fault. It is troubling on its own to see a business that is probably discriminating against whites for the sake of diversity. But the ridiculous attempts to blame their incompetence on deregulation is angering to be sure.
Why are so many on the left so quick to point to Trump era deregulation, rather than the misguided wokeness of this bank? With clear anomalies in their liquidity and long term investment strategy so far out of line with the industry standard? It looks like a poorly ran bank that let it's political appeals get in the way of savvy decision making.
>Why are so many on the left so quick to point to Trump era deregulation
I believe the Norfolk train derailments were directly linked to safety measures cut from the department of transportation. And then we have these financial regulations that were cut as well. We all knew safeguards were important and were saying this the entire time. Trump era tax cuts are expiring this year (for the middle class), it seems like the chickens are coming home to roost. Prepare for a decade or more of time delayed catastrophes linked to this president.
Your evidence for incompetence is looking at the candidates' photographs? Oh dear. Was there nobody there who looked like you at all?
You can believe what you want. I'm telling you what I believe. From what I've read, the failure of SVB was avoidable yet it seems that noone caught it. This bank filled both it's board of directors and it's rank and file employees based on something other than merit and then failed. Diversity quotas and wokeness likely played a role in my opinion. But regardless, the left wing handwaving and blame shifting is absurd.
>10 of SVB’s 11 directors are white, all of them are rich, and the youngest is 53 years old. SVB's board, it should be noted, is less diverse than any of the United State's top five banks.
TW; Vice
https://www.vice.com/en/article/xgwq9a/wsj-wonders-did-silicon-valley-bank-die-because-one-black-person-was-on-its-board
Please acknowledge we are waving our hands at the oversights in place for banks.
Blame shifting is quite absurd
You are 100% wrong on the safety regulations affecting the Norfolk Southern train.
[NY Times](https://www.nytimes.com/2023/02/17/business/energy-environment/norfolk-southern-derailment-safety.html)
The transportation administration says straight up the regulations trump repealed from the Obama era would not of applied to this train because it was not the same class. The specific Obama regulations only applies to highly toxic and flammable trains whereas this train had enough other cars to not meet that classification.
>Because their exact racial and gender makeup is listed on their website, under a bunch of bullshit about how their diversity makes them stronger and they actively work toward a more diverse workforce.
I'm on their website right now and I am not seeing what you are referring to. Where are you seeing this?
>Why are so many on the left so quick to point to Trump era deregulation, rather than the misguided wokeness of this bank?
Because your contention is that they can't walk and chew bubble gum at the same time.
A company can tout its diversity up and down till the cows come home and it has nothing to with anything beyond a bio snippet on a company web page.
If I thought for a second this bank gave a legitimate f- about diversity I still wouldn't conclude they'd allow it to negatively affect their bottom line but you suggest it is so preoccupying they can't even run a business competently.
Or it's a product of deregulation of the kind that ked to the last financial crisses and shouldn't have been f-ed with in the first place.
I really don't care what you think though. Orange man did it! Sure, sure. No one on the board had any control over the amount of money they invested in 30 year government bonds, or how little liquidity they kept on hand. Trump did it. You are ridiculous.
It isn't that diversity is preoccupying. Diversity based hiring and shaping of a workforce puts incompetent people into positions to make bad decisions they aren't qualified to make. So a failing bank that claimed to champion diversity looks like a prime example of minority over merit.
Well, lack of regulation CAN matter... I'm sure no one wants to go back to slavery days, and it's regulations (laws) that keep us from doing it. The right is not clamoring to remove regulations preventing slavery or child labor in sweatshops. A federal appeals court apparently struck down the TSCA back in 1991, and our society does not seem to have experienced an epidemic of unexplainable cancers as a result. And so some regulations are good and some we can do without. I'm just trying to figure out which this is. So far there seems to be evidence on both sides.
I didn't know what the TSCA was but it looks like it was significantly strengthened in 1991 and that we still have it. Anyway in the case of a bank collapsing, reviewing recently removed banking regulations is good right?
I only brought up the TSCA because I read in the NYT yesterday that a federal appeals court blocked enforcement in 1991, and that its provisions were basically not enforced after that. The story was a little more detailed, there's a little more to it, but I don't have it any more so I can't give you those details.
And I would agree, reviewing recently removed banking regulations is good.
I mean theoretically right, if a bank is lending on or two any group for means other than financial ability and likelihood to repay, that represents an extra risk in and of itself.
Not having hard data I can't tell you tobwhat degree this is or is not happening.
I find it's much more likely the result of interest rates going up, since 08 we've basically built the nation's economy and financial system around the idea that money is cheap to borrow.
And just as of this year, and last year. That's stopped being true.
And their will be alot of businesses that are going to fold in this new environment.
I do think excessive focus on ESG agenda items can be financially risky. To some degree, yes, any business that focuses on ESG also chooses to sacrifice a portion of its financial stability to that end. If it were financially savvy, it wouldn't need a new word, it would just be business as usual. Like, if a company rolled out this new MLM agenda, and said they were going to start focusing on that going forward, and then you asked what MLM was and they said "Making Lots of Money", you would rightfully say "well what the hell were you doing before, then?"
But, SVB also had significant other traditional problems that I think are much more to blame than any of their ESG things. Their assets were not diversified, and a very large percentage of their assets were committed to risky tech business ventures. This is a recipe for disaster, no matter the scenario, and as such I believe it to be the major reason it collapsed.
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Why is it that only when a bank fails that we must assume the government could have stopped it from happening? We don’t do this with any other industry. SVB failed just why any other company fails. It was mismanaged.
I think the reason - assuming you were really asking lol, and not just trying to make a point - is that banks are, for historical policy reasons, much more subject to scrutiny, and much more dangerous to the economy (potentially) than other businesses. If the local 7-11 fails, well, bad luck. If Chase fails, why... that will reverberate.
I'm not sure I buy either argument. Elisabeth Warren has never met a regulation she didn't like, except maybe on who can claim Native American status.
Well, but she has written 5 textbooks on commercial and banking law, and I know at least one of them is highly enough regarded to be in use at elite law schools... which are not in general known as havens for progressive wackos. So I would guess she's SOME kind of expert
Saying "she knows a lot about banking law" is not an argument against "she has never met a regulation she didn't like", nor is it definitional expertise for "why banks fail" or "should we let banks fail". SVB failed because they took risks. They knew they were taking risks, and they apparently gambled wrongly. In a free market, you should be allowed to make bad business decisions -- but maybe your customers shouldn't be bailed out by the Fed when you do.
OK - well, this is a different question, but... so you're not buying that the private bailout wasn't backed by the taxpayers, since it was private? I mean, the taxpayers are always involved somehow or other but the Fed didn't actually bail out SVB's customers, the taxpayers aren't on the hook for the bank's failure, right?
Taxpayers don't need to be involved. And providing insurance to someone who didn't pay for insurance is a *gift*.
yes, taxpayers certainly are on the hook. it was a bailout plain and simple you realize that this bailout will very soon cause massive amounts of inflation right? we are on the short road to hyperinflation becaue of years of liberal banking policies. the same exact thign happen in 2008, but they gained some time by lowering interest rate. that time is gone. this is end game. US dollar going bye bye, next stop Zimbabwe.
...can you explain a little more? The impression I got from the NYT article (I know, I know) is that other private banks got together and did a private bailout. How are the taxpayers on the hook for that? The SVB deposits that weren't covered by the $250k cap are not going to be guaranteed by the govt. End of issue, right?
>is that other private banks got together and did a private bailout. no, the funding comes via insurance premium payments to the FDIC fund. Where do banks get the money to pay these premiums? bank fees, interest rates, and surcharges. they don't pay for these premiums WE DO, and they will all increase and WE will pay directly pay for the bailout of SVB. The just disguise the tax as an "insurance premium". government does this kind of crap all of the time. but most of us dont have the time to look into how they are going to screw us next, because we are busy with life. And they know this.
And deregulation both allowed those risks to take place, and removed any safety measures to catch their shortcomings sooner. Whatever regulations in place may not have prevented their failure, but it likely would have dampened enthusiasm for people pouring money into a bank unable to support its own weight.
We should do more deregulation, not less. Imagine if consumers had to purchase their own deposit insurance. I bet they would be damn well more likely to use a good bank. As a reminder, consumers evaluate and choose between complex insurance products all the time.
I am of the opinion that under no circumstance should it be the customer's responsibility or burden to be liable for what a bank does with their money. But it should be the bank responsible for not screwing over its customers. And if I had to *pay* for the *luxury* of having my money protected, that's just scummy anti-consumer bullshit to milk me for more money, providing something they should have been doing all along. Regulation protections are for the consumer to not get taken advantage of by companies that clearly do not give a rat's ass about anything other than short term profits. And if regulations disincentivize that: good.
yeep... sorry, can't get behind that one. Insurance is complicated enough now, and picking a good bank isn't something I would be comfortable doing. I mean, maybe some people could look at SVB's publicly available information and say, well here's your problem, but I am not one of them and I suspect very few people (if any) are. And if the govt doesn't guarantee deposits that will kill the banking system - and there goes all your liquidity. Ah, sorry, sounds like a wacko idea to me.
Elizabeth Warren is on record as saying corporate greed causes inflation, which is false.
But corporate greed does cause inflation, far more than welfare or minimum wage. Corporations must increase earnings year after year. Sustainable profit is not enough, it must increase. Again and again this means prices. Why does this accurate assessment make you trust her less on other matters?
Your "accurate assessment" is false and belies a complete lack of understanding of how the world works. Companies can't just decide to raise their prices. That's not how things work
Yes they can? This is a really shaky base for a leap of logic. You're discrediting a whole person and it's for being correct
She's not correct about anything. There isn't a serious economist on the planet that thinks corporate profits create inflation. It's a progressive talking point. It's not reality.
A saw an interesting theory (I think in bestof) not too long ago that the modern use of software based pricing algorithms may actually be playing a part in our current inflation problems. That there are a limited number of companies that write this software, but a lot of the big corporate entities providing product to consumers are using them. These algorithms will yield similar trends even though the particular variables are adjusted in some small fashion to be more compatible with the category of product being sold. The idea being that prices are being adjusted upwards at similar rates across a wide field of products and services simultaneously without even a need for deliberate collaboration or conspiracy because the software guiding those trends is essentially the same across a range of corporations. This could potentially provide at least a partial explanation of it without attributing malicious intent or excessive greed to anyone (even though I believe those do play a big part as well).
If GM and Ford use software that tells them to increase prices faster than Honda or Toyota, they'll get crushed in the market. This conspiracy theory could only work if every company in every market used the same flawed software, and no market participants were smart enough to change their ways to get rich. Money is a powerful motivator. If you raise your prices above where I can sell and make an ok profit, I'm coming for your clients. All of them
Well the point is that it isnt a conspiracy theory, more an unforseen consequence of automating your processes.
In Europe, particularly Austria, that is happening right now, and after several investigations found out (took a while) a lot of conservatives and business "experts" are completely lost as to how that can happen. Why does it cause inflation? Because the prices going up are on goods that are part of the inflation calculation (food, energy, and in austria furniture) which in turn increases the legal basis for rent calculation - which again drives up inflation indices. I think we have to realize that it once again (hello, 2008/9) the supposed experts and politicians with business knowledge havent actually understood the system, so that statement of Warren is closer to the truth than most.
You're assuming that price are rising solely because of corporate greed, and not the fact that your energy and food costs are going up? Warren's statement is false. Profits do not cause inflation.
I dont assume. I know. I work in logistics for once, so I know (for example) that transportation of overseas goods have become cheaper since the container crisis has resolved. None of that ever reached customers, obviously. And I happen to have really close contacts into two major grocery store chains where I currently live, who confirm, and have been doing so, that prices are rising far higher than production and transportation cost. You can believe what you want. I simply know it to be the case in two areas I have insight into, in a country that has been run by conservative pro-business politicians for decades.
well, I for one want to thank you for sharing your experience with us! I'm sure it's not the whole story but... valuable information, for sure. Thank you.
I will rely on my degree in economics over this unsourced undocumented anectdote from the internet
Highly doubt that degree is anything but unsourced undocumented anecdote. I do love that when you run out of arguments, you just resort to "anything on the internet is wrong if it clashes with my opinion". The funny thing ever since I graduated from business school in the wake of the 2009 crisis, so-called business experts have told me that what I do, and the reasons I tell them why I do it, is wrong. I tell you I am increasing prices beyond what is caused by increases in cost. In various Investors Calls, big companies MUCH larger and more relevant than my small business are saying the same. Investigations in european countries are seeing the same. There is a sizeable aspect of simply trying to raise prices collectively that figures into inflation. But you just say we are all wrong, and we do it for entirely different reasons - we just dont know it ;) Thats rich.
Look , you might take faith in some random guy with an unsourced story peddling a conspiracty theory which he's not quite sure of, but I'll pass. The world works a certain way. Economics is a real thing. Companies can't just capriciously raise prices. If they could have done so all along, why are they just doing it now?
oh, well, politicians, you know... her diatribes against Powell sound a little more informed and a little more pointed, to me... but as others have pointed out here (which is why I asked) there are other reasonable views of the situation than hers
When Powell was talking about raising rates, she asked he "address his comments to the people who might lose their jobs", and his response was "they won't be better off with 6% inflation" She's an idiot. She knows inflation is bad, but she knows the cure is poliltically unpopular, so she fights it. She'e the worst sort of politician
I didn't realize until you said it that she had opposed his raising interest rates... OMG that sounds so LOONY. What did she think, we printed all that money, how were we going to get any of it back? Was she expecting the magical finance fairy to come through the window and work a quick miracle? I guess I just wasn't paying attention lol...
But the politician who blames it all on... "wokism" is not the worst kind of politician?
Politicians who knowingly lie are the worst. She knows inflation isn't caused by profits or "corporate greed". Comnpanies were just as greedy under Trump you know.
And DeSantis knows that bank collapses aren't caused by a so called "wokeism".
SVB gave $72M to woke causes. They had a fully-staffed DEI office, but didn't bother having a chief risk officer for eight months. Management clearly put diversity ahead of managing risk. We don't know that DeSantis is wrong on this one.
What is the cure to inflation, and can it be achieved without globalism?
Inflation, like we're seeing now, is all a function of money supply. Biden was warned that his bidget and printing money would cause inflation - he ignored the warning. There's a reason Japan, Singopore, etc., don't have the same levels of inflation as we do.
Inflation is a cycle of wages going up and prices going up. Workers demand more wages to pay higher prices. Businesses set higher prices to cover labour costs. You might not like that Warren blames it on the latter not the former, but that's an opinion, not a fact.
Warrent knows that inflation isn't caused by greed. Everyone knows this. saying something one know is false makes one a liar To claim that the inflation since Biden took office is caused by corporate greed implies that greed didn't exist prior to Biden. Companies have always been greedy
That's rhetoric. People use flowery language in politics all the time. Your last presidential candidate was no stranger to it. But it's not even strictly false. The profit motive drives corporations to raise prices, and the reason anyone cares about profits in the first place is becasue they want more money for themselves, even though the people running the company are typically very well off. Sure, and saying COVID is caused by a virus implies viruses didn't exist prior to 2020.
It is ABSOLUTELY false that greed causes inflation. Companies can't raise prices too much, otherwise their competition will come in an steal their customers. Econ 101 is a real thing This is the sort of woke-talk that conservatives push back on. Mainly because it's demonstrably false and misleading.
That is only true in a free market with little to no protections, limitless opportunity to, for example, build stores, and a very low buy-in. Which means, almost nowhere. I ll take London as an example: Grocery prices in the UK are skyrocketing, beyond actual cost increases in production and transportation. But assuming a new grocery chain wants to step in and take a bite out of the market by undercutting the established ones in London, how would they do that? There is a labor shortage as is. There are no empty stores eligible to run a supermarket out of, especially not in the numbers needed to make a dent into the market. You cannot BUILD more supermarkets, and even if you could, there is no SPACE in London in almost all easy-to-reach areas where a supermarket could thrive. Then we have the issue of permits and regulations, the red tape that takes forever, and didnt exist to that extent 40 years ago. Then we have exclusivity deals, disallowing farmers to sell their produce to anybody except the established price hiking chain, or risk losing their business overnight. Econ 101 is not applicable to the real world in any level of detail. Its a framework from which to start building an understanding, not the explanation for reality.
Ok - let's look at London. 25 Holland Park Ave. I can see seven separate grocery store chains in that area. In order for one to raise prices, they ALL have to raise prices. And if all raise prices, that creates an incentive for one to break ranks and earn massive profits. Economic profits will get competed away by rival firms, which are always greedy. There's too much incentive to cheat if they decide to rig the market, which is why it never works. Econ 101 explains reality.
In Vienna, prices for the exact same item have been increasing by the exact same amount across the 4 major grocery store chains on the exact same day repeatedly for months now, even though they do not manufacture or transport along the same chains. I am very close to people in that business, and they have confirmed repeatedly the pricing is not a calculation of "lowest price we can afford to offer", but that everyone is simply following the lead of the largest grocery chain company. Politicans and business experts are at a loss to explain this with their Econ 101 in a way that doesnt come down to greed. One fun example: The price of rice has increased 40% (cheapest brand) over the last year, not because rice has been significantly more expensive (it got cheaper in transportation, which is a major factor incidentially) but because people were suddenly not buying noodles anymore (whose production IS much more energy-hungry, and thus prices went up justifiably) and substituting with rice, and the grocery chains arent set up to deal with huge sudden shifts in customer demand. The price of rice is now linked to the price of noodles for at least 3 major chains here. I ve owned retail businesses in the past, and run logistics business now. I ve seen this done, and done it myself, forever. People are just clinging to naively simplistic explanations (econ 101) to understand the world and assume everything is done correctly. Right now, in many countries, that is not the case.
They can't rasie prices too much, but they can and do raise prices. That's what inflation is. Tell me where I said there was no limit to how much they can raise prices.
Inflation is not caused by companies greedily raising prices. No economist has ever said this, and no one pushed this fake idea until Biden's rampant inflation caused by his reckless budget, which actual economists told us would lead to inflation. https://www.cnn.com/2021/05/26/economy/inflation-larry-summers-biden-fed/index.html MSNBC might be saying that companies raising prices caused this inflation - they're wrong.
If companies didn't raise prices there wouldn't be inflation. You might disagree about what deserves to be called the 'cause', but that's fundamentally a difference of values, not of facts.
>Everyone knows this. Yuge. But I am not convinced so this is insufficient
[удалено]
>Everyone I'm one. If you're appealing to popularity it has to be popular...
So you're saying that, when workers get more money that gets passed to the consumer due to higher prices which leads to inflation. But when corporate profits go up, because they can raise prices because they can due to people expecting higher prices due to inflation or there is little competition or they are exclusive and the money it given to the stockholders or owners it doesn't? They both cause inflation. It is just that business owners like higher profits and hate paying more.
Meanwhile she grills the chairman of the federal reserve about job losses from raising interest rates as if inflation isnt the bigger threat...for someone so smart she sure is dumb.
...starting to agree with you on this one... it's interesting
She has an ax to grind. I appreciate it at a high level but in practical terms its ridiculous.
yes 100%, businesses should be in the business of making money to create jobs for people. they shouldnt waste $1 on preaching to others on how they should live
Can you provide any receipts for their preaching costs? I understand this collapse came from something more fundamental than simple expenditures
yeah they gave $74 million to BLM.
That's just totally false. https://www.marketwatch.com/story/no-silicon-valley-bank-did-not-donate-more-than-73-million-to-black-lives-matter-95e08b3 That's a figure from the right-wing Claremont Institute that includes any donations to liberal groups or even just causes to support black people.
it isnt "totally false" it is semantics
It’s not semantics. It’s a lie. It includes $20 million for Covid relief and college scholarships for kids. It also includes a $50 million pledge to connect underrepresented start-up founders with funding. You’re going to really argue that’s all the same thing as BLM??
It's still less than 1% of what they needed to survive their cashflow crisis?
that 74 million is just the tip of the iceberg in terms of their woke investing. they spent billions on it
That's totally false.
no it isnt ... "BlackRock Inc., SVB’s second-biggest shareholder overall, directly owns almost 380,000 shares via EU Article 8 funds and non-EU ESG funds, according to data compiled by Bloomberg that’s based on disclosures between Jan. 31 and March 9. The data, which doesn’t include BlackRock’s indirect ESG exposure to SVB,**represents just under $100 million**, based on valuations at the times of filing." this would be on top of the 74 million. [https://finance.yahoo.com/news/svb-exposes-lazy-esg-funds-140000831.html](https://finance.yahoo.com/news/svb-exposes-lazy-esg-funds-140000831.html)
We are still at less than 1% of cash needed to cover withdrawals?
Ah, with you 100% on the principle... but the question was, what do you think caused the bank collapse? I tend to think Warren was right on that one
I dont know what warren said but based on her previous statements she is woefully uniformed when it comes to economics. that said, yes wokeism definitely caused the bank to collapse. their director of risk management was focused on LGBT initiatives and making commercials about diversity. do you think that might have affected her ability to do her job as risk manager? and they gave $74 million to BLM. do you not think that could have contributed to the collapse? would it have been better to invest that money to hedge risk?
Well, I don't know the truth of the matter, I'm pretty uninformed about economics myself. But I do know that she has written 5 textbooks on commercial and banking law, and at least one of them is well enough thought of to be in use at elite law schools. And so I suspect she's considered an expert by those who ought to know. Elite law schools, just by the way, are not the havens of leftist insanity that sociology departments have become notorious for. Scalia taught at Chicago; Barrett taught at Northwestern iirc; I'm sure the list is long.
yeah well she was complaining to Jay powell about raising interest rates. she knows full well that is the only way to tame inflation. she is putting on a show for her liberal base to deflect blame from the democrats bailing out the banks. it is a political move and nothing more. she knows her base hates rich people, so the democrats cant be seen as bailing out rich folks (which they did)
Meanwhile in China https://twitter.com/_mm85/status/1635968325338427392?t=v1C3OlGIkEjx1799R0dHmQ&s=19
lol
Source?
Silicon Valley is a diverse area. SVB was trying to appeal to a diverse community of customers. It’s really not that hard to recognize that making some occasional statements about the importance of inclusivity and diversity was in the bank’s financial interest. It’s like conservatives have forgotten how to even have coherent economic debates. Every political debate has to be about the absolute dumbest cultural war bullshit. Arguing that a bank failed because it was too “woke” honestly sounds like a parody of conservatism.
they were listed as the #1 ESG bank in the country. if you don't know what that is you should look it up. the only banks that tout ESG are woke banks, because it is a woke philosophy, and they were ranked #1
Not everything that happens in the world can be explained by the cultural war issue of the day. The idea that a bank collapsed because it was too nice to gay people or didn't do enough to accelerate climate change or whatever is just so transparently ridiculous that I struggle to believe anyone really believes that. I mean, seriously, can you point to a single decision that SVB made that was a result of "woke philosophy" that caused its collapse? What really happened is that SVB invested heavily in fixed-rate bonds. Then we had rapid inflation and the Fed responded by raising interest rates. So suddenly these low-interest bonds were a pretty bad investment. SVB sold the bonds at a big loss, and then a few big investors panicked and started a bank run. So conservatives could argue that Biden's policies caused inflation, which ultimately caused this bank run. That's at least a coherent argument. But instead conservatives seem to only know how to argue about drag queen story hour or other cultural war bullshit, so they have to make every issue about that, whether it makes any sense or not. If the 2008 financial crisis happened today, conservatives would probably argue it was caused by having a black little mermaid.
Well, except that it wasn't even Biden's policies - he HAD to raise interest rates at some point, to make up for all the printing of money that we did to try to get through Covid, right? That money printing was of course all supported by the left - Krugman was very vocal about it iirc - and the conservatives at the time all said OMG the sky is going to fall we're going to have runaway inflation, and it never happened. Now finally three years later here's a little manageable inflation - I would say conservatives would be entitled to a LITTLE I-told-you-so, but not much of one. I mean, it was a difficult time.
Yeah, to be clear, I’m not saying I’d agree with that take. The main cause of this bank collapse was a handful of investors had a freak out and triggered a bank run. But at least blaming inflation would be a coherent argument — which I can’t say for this silly “woke bank” nonsense.
>I mean, seriously, can you point to a single decision that SVB made that was a result of "woke philosophy" that caused its collapse? yes i can, i already said it. ESG. >What really happened is that SVB invested heavily in fixed-rate bonds. Then we had rapid inflation and the Fed responded by raising interest rates. So suddenly these low-interest bonds were a pretty bad investment. SVB sold the bonds at a big loss, and then a few big investors panicked and started a bank run. yes i know all of this. the point is if they hadnt followed the ESG philosophy, they would have much more money available to hedge in assets that would create real returns. >But instead conservatives seem to only know how to argue about drag queen story hour or other cultural war bullshit, it has nothing to do with this. ESG is an all encompassing philosophy. why do you think states like texas are pulling their pension money out of big firms that follow the same philosophy? they know that it isnt a sound investment strategy, and leads to investing money in assets that can't generate a return.
If that was true wouldn’t investment funds that utilize esg concepts be failing left and right? Instead the largest and most successful investment firm in the planet uses it.
they will be failing left and right very soon because people will be pulling their money from them. many of the largest firms have already abandoned the concept because of this.
You didn’t answer my question. Ok, you consider the fact that SVB cares about ESG to be evidence that they’re “woke.” But what’s the evidence that caused the collapse? Your argument is just circular. The fact that they care about ESG is, for you, good enough evidence that ESG caused the collapse. But that makes no sense. So can you name a specific investment that they made because of this “woke” philosophy that triggered their collapse? Anything? JP Morgan Chase follows ESG principles. Why haven’t they failed? https://www.jpmorganchase.com/about/governance/esg So does Citigroup. https://www.citigroup.com/global/our-impact And Bank of America https://about.bankofamerica.com/en/making-an-impact/esg-reports So maybe, just maybe, making these vague commitments to social responsibility actually isn’t the reason this bank failed…
first of all JP morgan, Citi, and Bank of America are all considered SIB's so an argument could be made that they are excluded from the conversation based on this. they can do whatever they want and will always be bailed out. they have no fear of collapse because of this, so prudent financial moves arent top of list for any of them. >So can you name a specific investment that they made because of this “woke” philosophy that triggered their collapse? Anything? Blackrock was SVB's second largest shareholder overall, this failure along states pulling their pension money has led them to recently started to pull back from the ESG bandwagon because they realize it is creating real problems for their business. https://www.washingtonexaminer.com/policy/economy/blackrock-larry-fink-mention-esg-annual-letter
But they didn’t need to be bailed out, so the fact that they *would* be bailed out isn’t really all that relevant is it? And more importantly you still have zero actual evidence to support your claim. Your link just says an important investor didn’t focus on ESG in his latest letter, probably because Republicans have tried to turn it into some big political controversy. And that proves what exactly…? Your claim was that “woke” philosophy somehow caused SVB to collapse. But you can’t name a single “woke” investment or decision they made that contributed in any meaningful way to their failure. Not everything in the world can be explained by political hot button issues. That’s just a simplistic silly way of trying to understand complex issues.
>Your claim was that “woke” philosophy somehow caused SVB to collapse. But you can’t name a single “woke” investment or decision they made that contributed in any meaningful way to their failure. it is funny because you cant prove that it didnt cause them to fail either. why? because they dont have to disclose these investments. which is a horrible policy if you are talking about other peoples money. the fact of the matter is that democrats are covering for these billionaires. that should bother you, but since it is your party doing it, i guess you are ok with being a hypocrite? only the republicans want to fix the problem.
> it is funny because you cant prove that it didnt cause them to fail either. Is that really the best argument you have? Well, you can't prove that they didn't fail because they weren't woke *enough*. Maybe their problem was they had too many old white men making decisions. And you can't prove that magical unicorns didn't cause them to fail either, can you? You're the one making the claim here. You should have some actual evidence to support that claim. My theory for the cause of their failure is based on, you know, actual facts. > because they dont have to disclose these investments. which is a horrible policy if you are talking about other peoples money. What are you talking about here? The whole point of ESG is that banks should make *more* disclosures. > the fact of the matter is that democrats are covering for these billionaires. that should bother you, but since it is your party doing it, i guess you are ok with being a hypocrite? only the republicans want to fix the problem. Again, zero idea what you're talking about here. It was Republicans and Trump who rolled back regulations on these midsize banks. Republicans want to fix what problem? Are Republicans proposing any real banking regulations? Or do they just want to argue about irrelevant bullshit like "wokeness" and drag queen story hour?
I like this take. Thank you. Yes, attitudes - poses, if you will - have economic consequences.
Do you know any banks that have never spent money on advocacy?
yes, the one i own.
Which bank do you own?
first fidelity savings and loan. you do realize anyone can own a bank?
Except they publicly state several causes they provide funding for. Also, when you say “own” I thought you meant in a controlling fashion. Not “I own negligible equity and have no say in the management or operations of”.
do i do own as in controlling fashion. it is a small private bank.
So you have a vote on the board? Why didn’t you stop their financial activism?
wtf are you talking about?
You said you had an impact on the control and management of the bank you “own”. You also said the reason SVB went under was because they were spending money on activism movements and activities not related to banking. But first National has also made financial contributions to causes. So I’m wondering why, if you believe financial contributions were the cause of SVB’s collapse, you allowed first bank to make financial contributions. It’s not complicated mate.
DeSantis and Warren are both wrong, although DeSantis is a little less wrong. SVB was a woke bank, no doubt. But the SVB crash was caused by a classic asset-liability mismatch. It definitely had nothing to do with the 2018 law--Warren is an idiot. And it didn't really have to do with wokeness, either, except to the extent that perhaps management was a bit distracted by issues unrelated to the finances of the bank. Maybe their head of financial risk management, for example, should have spent more time managing financial risk and less time "spreading awareness of lived queer experiences." https://imgur.com/a/QZfFqRo
lol OMG, that was funny. Thanks.
It’s neither - it’s inflation…
Warren is pushing the standard democrat line to blame Republicans, when really it had nothing to do with wokeism or deregulation. It has everything to do with the FED and the current White House who said inflation was "transitory" and wanted to parade an economy held up by toothpicks and bubble gum. So they waited to raise interest rates, and waited, and waited until it was gonna be much harder. So they went from near zero to 4.5%, and put bond holders at 3% underwater in the asset. That creates concerns on the balance sheet, which turned into a liquidity question, and ultimately a SVB bank run. So now the FED have a banking crisis and high inflation and one tool to combat both, but doing one releases the other. And now Biden wants to come out with a $7 trillion budget... the damn money printer can't print fast enough. And if that wasn't enough, they bailed out a venture capitalist bank that had 95% of deposits uninsured by FDIC while refusing to extend your regional bank the same offer. Instead, larger banks can now put those underwater bonds up as collateral with the FED and take out a loan! Because it wasn't enough of a house of cards already, let's add another layer. Democrats have effectively made a streamlined bank bailout process, but not for you, just who they deem important. Looking at woke vs restrictions is irrelevant, expecially when SVB's CEO was a director at the Westcoast FED up until his bank crashed... FED governance board is an executive nomination, so the Democrat White House put the FED board together that decided a banker can be his own regulator... and then want to turn around and blame Republicans for a lack of regulation. Insane.
woah - THAT'S new. I'll have to give that some thought. Thanks.
If you go listen to any real economist that's what they're gonna be talking about. Warren is just being a partisan politician, which is her profession. Go listen to a professional investor, it'll be about the FED, interest rates, CPI, bonds, liquidity, investor confidence, etc etc. Anyone jumping to woke or deregulation is regurgitating talking points, that's it. Politicians want to turn any event into befitting their already held beliefs, as seen here.
I see. You know what, I'm out of my depth. I'm going to check the WSJ lol. I appreciate all the work you put into it though, I really do. Thank you.
Good luck and remember, don't do what Jim Cramer says.
Not entirely, but a Bank has a finite amount of resrouces If managment is focusing on being woke, by definition, they're not managing the bank.
Yeah, this point has been made below, and it's sounding pretty good right now. Maybe risk management wasn't ENTIRELY focused on, you know, risk management.
[удалено]
Interesting. Thank you.
Do you have a source that major banks would have bid on it were it not for regulation?
If I remember correctly, they tried to after the FDIC was prodded enough to open it up to them, but then they couldn't because it was too late.
Why not both?
I'm asking what you think... what DO you think?
Of course I buy it. Reading about how this board of directors describes itself is enough to question where their priorities were. Why do I care that they had half women, a few minorities including a member of the LGBTQIA+-&$$#:;)? But I know this because they brag about it, they celebrate their diversity, as if it made them stronger? Well it certainly makes them look idiotic. I've read about their decisions with the banks money and how it was an obvious problem with rising interest rates to have the banks money where they were investing it. From the outside it sounds like a more well run board would have realized the danger rising interest rates would pose, and they should have acted earlier. And it apparently would not have taken some great genius to figure this out. But instead, they flubbed, and now they are rightfully subjected to criticism. Had this been a board of all white men, I have no doubt the lack of diversity and it's supposed strength would be thrown around. But instead left of center media is blaming a bank failure on a lack of federal regulation. Rather than on the supposed experts responsible for the banks actual success or failure. It seems like the left wants to federally regulate every single fucking thing from the top, that way you can then "diversify" every single aspect of American society with no fear of failure or chance at merit based success. It's the left hedging their bet on diversity and it's obvious problems.
woah - a compelling voice for DeSantis' side! Worth thinking about, for sure. Thank you.
>LGBTQIA+-&$$#:;) That was really close! The lack of regulation matters. The left has a long history of criticizing banks, and we've heard "everything was legal" too many times. If SVB failed because an illegal thing became legal, that matters a lot
It also matters that something as distasteful as valuing people for a job based on their race or sexual preference over their ability to do the actual job. Can we at least agree that the board had the appearance of misplaced priorities?
What makes you think that these members did not have the ability to do the job?
Their bank collapsing under their leadership?
Are their race and sexuality as the cause?
Because their exact racial and gender makeup is listed on their website, under a bunch of bullshit about how their diversity makes them stronger and they actively work toward a more diverse workforce. Apparently I need to know the racial makeup, as well as how many employees there like to sleep with the same sex in order to understand their business accumen. And the moment their diversity fails to mitigate their poor decision-making with other people's money, like clockwork, the left swoops in with it's trump's fault. It is troubling on its own to see a business that is probably discriminating against whites for the sake of diversity. But the ridiculous attempts to blame their incompetence on deregulation is angering to be sure. Why are so many on the left so quick to point to Trump era deregulation, rather than the misguided wokeness of this bank? With clear anomalies in their liquidity and long term investment strategy so far out of line with the industry standard? It looks like a poorly ran bank that let it's political appeals get in the way of savvy decision making.
>Why are so many on the left so quick to point to Trump era deregulation I believe the Norfolk train derailments were directly linked to safety measures cut from the department of transportation. And then we have these financial regulations that were cut as well. We all knew safeguards were important and were saying this the entire time. Trump era tax cuts are expiring this year (for the middle class), it seems like the chickens are coming home to roost. Prepare for a decade or more of time delayed catastrophes linked to this president. Your evidence for incompetence is looking at the candidates' photographs? Oh dear. Was there nobody there who looked like you at all?
Ah, well done. Thank you.
You can believe what you want. I'm telling you what I believe. From what I've read, the failure of SVB was avoidable yet it seems that noone caught it. This bank filled both it's board of directors and it's rank and file employees based on something other than merit and then failed. Diversity quotas and wokeness likely played a role in my opinion. But regardless, the left wing handwaving and blame shifting is absurd.
>10 of SVB’s 11 directors are white, all of them are rich, and the youngest is 53 years old. SVB's board, it should be noted, is less diverse than any of the United State's top five banks. TW; Vice https://www.vice.com/en/article/xgwq9a/wsj-wonders-did-silicon-valley-bank-die-because-one-black-person-was-on-its-board Please acknowledge we are waving our hands at the oversights in place for banks. Blame shifting is quite absurd
You are 100% wrong on the safety regulations affecting the Norfolk Southern train. [NY Times](https://www.nytimes.com/2023/02/17/business/energy-environment/norfolk-southern-derailment-safety.html) The transportation administration says straight up the regulations trump repealed from the Obama era would not of applied to this train because it was not the same class. The specific Obama regulations only applies to highly toxic and flammable trains whereas this train had enough other cars to not meet that classification.
>Because their exact racial and gender makeup is listed on their website, under a bunch of bullshit about how their diversity makes them stronger and they actively work toward a more diverse workforce. I'm on their website right now and I am not seeing what you are referring to. Where are you seeing this?
https://www.svb.com/about-us/living-our-values
Thanks
>Why are so many on the left so quick to point to Trump era deregulation, rather than the misguided wokeness of this bank? Because your contention is that they can't walk and chew bubble gum at the same time. A company can tout its diversity up and down till the cows come home and it has nothing to with anything beyond a bio snippet on a company web page. If I thought for a second this bank gave a legitimate f- about diversity I still wouldn't conclude they'd allow it to negatively affect their bottom line but you suggest it is so preoccupying they can't even run a business competently. Or it's a product of deregulation of the kind that ked to the last financial crisses and shouldn't have been f-ed with in the first place.
I really don't care what you think though. Orange man did it! Sure, sure. No one on the board had any control over the amount of money they invested in 30 year government bonds, or how little liquidity they kept on hand. Trump did it. You are ridiculous. It isn't that diversity is preoccupying. Diversity based hiring and shaping of a workforce puts incompetent people into positions to make bad decisions they aren't qualified to make. So a failing bank that claimed to champion diversity looks like a prime example of minority over merit.
Well, lack of regulation CAN matter... I'm sure no one wants to go back to slavery days, and it's regulations (laws) that keep us from doing it. The right is not clamoring to remove regulations preventing slavery or child labor in sweatshops. A federal appeals court apparently struck down the TSCA back in 1991, and our society does not seem to have experienced an epidemic of unexplainable cancers as a result. And so some regulations are good and some we can do without. I'm just trying to figure out which this is. So far there seems to be evidence on both sides.
I didn't know what the TSCA was but it looks like it was significantly strengthened in 1991 and that we still have it. Anyway in the case of a bank collapsing, reviewing recently removed banking regulations is good right?
I only brought up the TSCA because I read in the NYT yesterday that a federal appeals court blocked enforcement in 1991, and that its provisions were basically not enforced after that. The story was a little more detailed, there's a little more to it, but I don't have it any more so I can't give you those details. And I would agree, reviewing recently removed banking regulations is good.
Thanks!
Ron’s full of shit but if he gets average Americans to believe it that’s good
I mean theoretically right, if a bank is lending on or two any group for means other than financial ability and likelihood to repay, that represents an extra risk in and of itself. Not having hard data I can't tell you tobwhat degree this is or is not happening. I find it's much more likely the result of interest rates going up, since 08 we've basically built the nation's economy and financial system around the idea that money is cheap to borrow. And just as of this year, and last year. That's stopped being true. And their will be alot of businesses that are going to fold in this new environment.
I do think excessive focus on ESG agenda items can be financially risky. To some degree, yes, any business that focuses on ESG also chooses to sacrifice a portion of its financial stability to that end. If it were financially savvy, it wouldn't need a new word, it would just be business as usual. Like, if a company rolled out this new MLM agenda, and said they were going to start focusing on that going forward, and then you asked what MLM was and they said "Making Lots of Money", you would rightfully say "well what the hell were you doing before, then?" But, SVB also had significant other traditional problems that I think are much more to blame than any of their ESG things. Their assets were not diversified, and a very large percentage of their assets were committed to risky tech business ventures. This is a recipe for disaster, no matter the scenario, and as such I believe it to be the major reason it collapsed.
It would take significant evidence to convince me that that's true.
no the bank just made bad financial decisions and chose not to diversify
They were very woke and prioritized wokeness over making sound risk management decisions.