



âȘ Oh so woke, oh so green and oh so diverse Silicon Valley Bank (SVB) just went bust...
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Filler
ne can go to the Silicon Valley Bank website if it’s even still online and see that they claim assets of $212 billion. But as they say, the bigger they are, the harder they fall; and SVB makes for the second largest bank failure in U.S. history.Â
Remarkably, 93 percent of the bankâs $161 billion in deposits are uninsured by the Federal Deposit Insurance Corporation (FDIC), which only covers accounts up to $250,000. And Roku, to name just one whale, had $487 million in Silicon Valley Bank. So, just for starters, a lot of CFOsâthe folks in charge of handling a companyâs moneyâare gonna have some âsplaining to do.
Speaking of âsplaining, SVB officials will need to answer a lot of questions, including, What role did wokeness play in SVBâs failure?Â
Another term for wokeness, of course, is ESG, which stands for environmental, social, and governance. ESG is a pertinent question, as thereâs a considerable body of economic literature showing that woke investments arenât good investments. For instance, one study by professors at the London School of Economics and Columbia University finds that:
ESG funds appear to underperform financially relative to other funds within the same asset manager and year, and to charge higher fees. Our findings suggest that socially responsible funds do not appear to follow through on proclamations of concerns for stakeholders.
The shorter version:Â ESG makes less, costs more, and is a fraud.Â
Of course, if ESG investing only soothed the conscience of gullible trust-funders, it might be okay. But now, as a big ESG bank goes belly up, we see the danger of systemic risk to the whole economy. Thatâs what happened when bank failures domino-ed back in 1929.
So, itâs funny, in a not-funny way, that as recently as March 7, Treasury Secretary Janet Yellen was urging faster please on ESG. âA delayed and disorderly transition to a net-zero economy can lead to shocks to the financial system,â she said.
Well, we havenât gotten to net-zero yetâand we never will, especially with China still building coal plantsâbut weâve already had a shock to the financial system.
Then thereâs the question of bailing out SVB beyond FDIC requirements. As The Washington Post reported on Saturday, a âferocious political debateâ has erupted in D.C. over some political fix that could, of course, cost taxpayers many, many billions. On the other hand, a larger and graver banking crisis could damage the economy and cost Biden many, many votes. So, what D.C. will do is an unknown unknown.
Yet in the meantime, if the evidence continues to pile up that woke/ESG is bad business, then it will be hard for financial officers across the spectrumâin banks, investment houses, pension funds, insurance companies, and university endowmentsâto argue that they can be woke while still upholding their fiduciary duty. That duty is a heavy legal concept, containing significant civil and even criminal penalties if it is violated.
To be sure, plenty have been warning about the dangers of ESG, including House Majority Leader Steve Scalise (R-LA) and also some of those directly tasked with growing and safeguarding pension funds, such as West Virginia State Treasurer Riley Moore. Thereâs even a new network of right-leaning investment overseers, the State Financial Officers Foundation.
So, now expect a scramble, as all the Emperors of ESGâincluding Al Gore, Larry Fink of BlackRock, and maybe even Bonoârush to tell us that this is fine. (As for Janet Yellen, weâll take her gauge later on.)
Okay, back to SVB and its fiduciary duty, which is especially extensive when it comes to federally regulated banks.  (Once again, nobody wants another Depression.) Letâs consider SVBâs fiduciary duty as we go through the bankâs own statements. (We can leave for another time speculation about any other legal violations that might have been committedâit is, after all, quite something to blow $212 billion.)
For instance, hereâs an SVB headline from January 10, 2022: âSilicon Valley Bank Commits to $5 Billion in Sustainable Finance and Carbon Neutral Operations to Support a Healthier Planet.â Sounds green! But was that the best use of funds? All we know for sure is that CEO Greg Becker chose not to address the fiduciary matter when he said, âOur ability to make a meaningful difference for people and the planet, and to address the systemic risk that climate change presents, is magnified by the outsized impact our innovative clients make.âÂ
All that money might have seemed great for some people (not counting, say, the slave laborers in Africa mining green minerals) and maybe the planet (not counting the bald eagles being killed by windmills), but it doesnât seem to have been great for SVB investors and depositors.
SVB has more to proclaim about ESG:
Our corporate philosophy of transparency and accountability guides our reporting on environmental, social and governance performance with the goal of building trust and evolving our policies and disclosures.
Yes, thatâs what SVB is all about, right? Building trust. Although some have a funny way of building it. For instance, it seems that SVB CEO Becker sold $3.6 million in stock on February 27. Did he know something? Did he act on insider information? (Thereâs a whole ânother passel of laws concerning that, and theyâre doozies.)
And it gets better. Hereâs more green blather from SVB:Â
We support entrepreneurs and high-growth businesses at the forefront of innovation, helping to advance solutions that create a more just and sustainable world. Our longstanding commitment to innovation, combined with our deep experience supporting evolving technologies, enables us to contribute to a healthier planet via our own efforts and those of our clients.Â
A good paragraph for Woke Bingo: âjust, sustainable, healthier planetââso many words to win!
Of course, SVB is also big into DEI (Diversity, Equity, and Inclusion), declaring, âWeâre building a culture of belonging with a global workforce that celebrates greater dimensions of diversity.â More Bingo hits. And to get an even better sense of SVBâs DEI footprint, we might consider this (now deleted) tweet from one Christina Qi, who identifies herself as a former hedge fund CEO:
The SVB collapse has been devastating in more ways than one: They supported women, minorities, & the LGBTQ community more than any other big bank. This includes not just diverse events, but actual funding. SVB helped us move one step forward; without them, we move two steps back.
One sharp tweeter responded, âMaybe other banks will take a look at this failure and realize they need to do actual banking instead of virtue signaling.â
Hmm. Was all that virtue-signaling in keeping with fiduciary duty? Is this what the Biden administration might possibly choose to bail out?
Sunlight Is The Best Disinfectant
Itâs a challenge to to cut through this spiel; as the song goes, âthe informationâs unavailable to the mortal man.â Fortunately, to help, we have subpoenas and other investigative tools. So, while the Biden Administration might not be interested in digging too deep on SVB, others will be.Â
Yes, the fate of SVB is a topic for Congressional investigative committees, at least on their Republican side.
One Republican with a good sense of how this could work is entrepreneur-turned-Republican presidential candidate Vivek Ramaswamy, an early woke-watchman. As he tweeted in the wake of the SVBâs fall:
A key cause of the 2008 financial crisis was the use of social factors to make loans (back then, fostering home ownership). When we donât learn lessons, history repeats itself: did Silicon Valley Bank use ESG factors to price its loans? Roll that log over & see what crawls out.
For people wondering where their funds wentâand for others merely curious about how the rich play with other peopleâs moneyâCongressional hearings can indeed be instructive. Those curious about how theyâve worked in the past might Google âPujo, Pecoraâ and âEnron,â as well as âLehman Brothers.â
In each of those past cases, we found that financial players were either not as strong as touted or they were outright frauds. We got through each meltdown, but lots of people lost moneyâand not enough people went to jail.
So, does SVB prove that the green economy is a house of cards? âȘ
























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