{"id":30882,"date":"2023-03-28T13:58:30","date_gmt":"2023-03-28T17:58:30","guid":{"rendered":"https:\/\/www.megalextoria.com\/wordpress\/?p=30882"},"modified":"2023-03-28T13:58:30","modified_gmt":"2023-03-28T17:58:30","slug":"is-wokeism-to-blame-for-silicon-valley-banks-demise-no-and-yes","status":"publish","type":"post","link":"https:\/\/www.megalextoria.com\/wordpress\/index.php\/2023\/03\/28\/is-wokeism-to-blame-for-silicon-valley-banks-demise-no-and-yes\/","title":{"rendered":"Is \u2018Wokeism\u2019 to Blame for Silicon Valley Bank\u2019s Demise? No and Yes"},"content":{"rendered":"<p><a href=\"https:\/\/www.megalextoria.com\/wordpress\/?attachment_id=30883\" class=\"attachment wp-att-30883\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/www.megalextoria.com\/wordpress\/wp-content\/uploads\/2023\/03\/svb-collapse_woke-1024x683-1.jpg\" alt=\"\" width=\"802\" height=\"535\" class=\"aligncenter size-large wp-image-30883\" \/><\/a><\/p>\n<p><span style=\"font-weight: 400;\">Within days of Silicon Valley Bank\u2019s swift and shocking collapse, a narrative formed that \u201cwokeism\u201d lay at the heart of the California bank\u2019s sudden demise. It began with a Fox News appearance by Home Depot co-founder Bernie Marcus.<\/span><\/p>\n<p>&#8220;I feel bad for all of these people that lost all their money in this woke bank,\u201d Marcus <a rel=\"nofollow\" href=\"https:\/\/www.foxnews.com\/media\/home-depot-co-founder-torches-woke-silicon-valley-bank-collapse-warns-recession-here-already\" class=\"keychainify-checked steem-keychain-checked\">told <\/a><a rel=\"nofollow\" href=\"https:\/\/www.foxnews.com\/media\/home-depot-co-founder-torches-woke-silicon-valley-bank-collapse-warns-recession-here-already\" class=\"keychainify-checked steem-keychain-checked\">host<\/a> Neil Cavuto. \u201cYou know, it was more distressing to hear that the bank officials sold off their stock before this happened.\u201d<\/p>\n<p>Similar criticism followed from rank-and-files members of the GOP, including House Oversight chairman James Comer, who <a rel=\"nofollow\" href=\"https:\/\/www.businessinsider.com\/james-comer-woke-silicon-valley-bank-2023-3\" class=\"keychainify-checked steem-keychain-checked\">decried<\/a> SVB\u2019s \u201cESG-type policy and investing.\u201d<\/p>\n<p>The charges prompted an avalanche of media responses attempting to debunk claims that \u201cwokeness\u201d had anything to do with the collapse of SVB or the distress of other financial institutions, such as Signature Bank.<\/p>\n<p>\u201cThere\u2019s no evidence that SVB\u2019s sustainable investing or diversity initiatives contributed to its collapse,\u201d <em>Washington Post<\/em> business and tech reporter Julian Mark <a rel=\"nofollow\" href=\"https:\/\/www.washingtonpost.com\/business\/2023\/03\/14\/svb-esg-woke-investing\/\" class=\"keychainify-checked steem-keychain-checked\">wrote<\/a>.<\/p>\n<p>\u201cNo, diversity did not cause Silicon Valley Bank\u2019s Collapse,\u201d the <em>New York Times <\/em><a rel=\"nofollow\" href=\"https:\/\/www.nytimes.com\/2023\/03\/15\/us\/politics\/silicon-valley-bank-collapse-woke-fact-check.html#:~:text=Fact%20Check-,No%2C%20'Wokeness'%20Did%20Not%20Cause%20Silicon%20Valley%20Bank's%20Collapse,work%2C%E2%80%9D%20one%20expert%20said.\" class=\"keychainify-checked steem-keychain-checked\">assured readers<\/a> in a headline.<\/p>\n<p><strong>What Is \u2018Woke\u2019?<\/strong><\/p>\n<p>Woke is a surprisingly tricky term to define\u2014just ask Bethany Mandel who recently went viral<\/p>\n<p>when she froze on TV after being asked to define it\u2014in part because it means different things to different people.<\/p>\n<div style=\"display: flex; max-width: 550px; width: 100%; margin-top: 10px; margin-bottom: 10px;\"><iframe id=\"twitter-widget-0\" scrolling=\"no\" frameborder=\"0\" allowtransparency=\"true\" allowfullscreen=\"true\" class=\"\" style=\"position: static; visibility: visible; width: 550px; height: 697px; display: block; flex-grow: 1;\" title=\"Twitter Tweet\" src=\"https:\/\/platform.twitter.com\/embed\/Tweet.html?creatorScreenName=feeonline&amp;dnt=false&amp;embedId=twitter-widget-0&amp;features=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%3D&amp;frame=false&amp;hideCard=false&amp;hideThread=false&amp;id=1636136774610169858&amp;lang=en&amp;origin=https%3A%2F%2Ffee.org%2Farticles%2Fis-wokeism-to-blame-for-silicon-valley-bank-s-demise-no-and-yes%2F&amp;sessionId=e7694ac7a73475f2079dab8add8c9dd011fd3b81&amp;siteScreenName=feeonline&amp;theme=light&amp;widgetsVersion=aaf4084522e3a%3A1674595607486&amp;width=550px\" data-tweet-id=\"1636136774610169858\"><\/iframe>\n<\/div>\n<p>What\u2019s clear is that \u201cwokeness\u201d is intertwined with the concept of Diversity, Equity, and Inclusion (DEI), an idea <a rel=\"nofollow\" href=\"https:\/\/en.wikipedia.org\/wiki\/Diversity,_equity,_and_inclusion\" class=\"keychainify-checked steem-keychain-checked\">broadly defined<\/a> as a \u201cframework that seeks to promote the fair treatment and full participation of all people, especially in the workplace, including populations who have historically been under-represented or subject to discrimination.\u201d<\/p>\n<p>Treating all people fairly isn\u2019t a particularly controversial or revolutionary idea, but critics of \u201cwokeness\u201d complain that DEI initiatives go beyond the fair and equal treatment of individuals, giving preferred treatment to historically marginalized groups. Moreover, there\u2019s a concern that corporate DEI initiatives are emphasizing social causes over sound business practices and maximizing shareholder value.<\/p>\n<p>For example, SVB famously <a rel=\"nofollow\" href=\"https:\/\/www.svb.com\/news\/company-news\/silicon-valley-bank-commits-to-$5-billion-in-sustainable-finance-and-carbon-neutral-operations-to-support-a-healthier-planet\" class=\"keychainify-checked steem-keychain-checked\">pledged<\/a> to provide at least $5 billion \u201cin sustainable finance and carbon neutral operations to support a healthier planet.\u201d The bank\u2014which <a rel=\"nofollow\" href=\"https:\/\/news.bloomberglaw.com\/bankruptcy-law\/svb-financial-in-bankruptcy-after-bank-unit-failure-explained\" class=\"keychainify-checked steem-keychain-checked\">is currently in bankruptcy<\/a> proceedings\u2014also <a rel=\"nofollow\" href=\"https:\/\/nypost.com\/2023\/03\/15\/svb-donated-73m-to-black-lives-matter-movement-social-justice-causes\/\" class=\"keychainify-checked steem-keychain-checked\">donated<\/a> $73 million to Black Lives Matter and similar social justice causes.<\/p>\n<p>Meanwhile, video has emerged of Signature Bank Chairman Scott Shay, whose bank was recently shut down by regulators, <a rel=\"nofollow\" href=\"https:\/\/nypost.com\/2023\/03\/14\/signature-bank-boss-scott-shay-led-seminar-on-pronouns\/\" class=\"keychainify-checked steem-keychain-checked\">offering a lengthy tutorial<\/a> on the proper usage of gender-neutral pronouns.<\/p>\n<p>Even proponents of DEI initiatives would likely concede these are \u201cwoke\u201d practices. But did the \u201cwoke\u201d lectures and programs have anything to do with the collapse of SVB and Signature Bank, both of which unfairly (<a rel=\"nofollow\" href=\"https:\/\/fee.org\/articles\/why-we-should-let-bad-banks-fail\/\" class=\"keychainify-checked steem-keychain-checked\" data-toggle=\"popover\">and dangerously<\/a>) received bailouts from the federal government?<\/p>\n<h2 id=\"link-0\">\u2018A Negligent Board of Directors\u2019<\/h2>\n<p>Many astute financial experts brush off claims that \u201cwokeism\u201d caused the reckoning facing SVB, rightly pointing out that macroeconomic factors triggered financial chaos across the world. (The Swiss bank Credit Suisse <a rel=\"nofollow\" href=\"https:\/\/www.cnn.com\/2023\/03\/23\/investing\/credit-suisse-ubs-impact-switzerland\/index.html\" class=\"keychainify-checked steem-keychain-checked\">also had to be rescued<\/a>, and there\u2019s little evidence its collapse was related to wokeism.)<\/p>\n<p>In the United States, rising interest rates resulted in far less borrowing, particularly for tech startups, which are the primary clients of banks like SVB. Meanwhile, SVB had loaded up on (seemingly low risk) Treasury bonds, which saw their value plummet when the Federal Reserve began sharply raising interest rates to combat rampant inflation. Barron\u2019s <a rel=\"nofollow\" href=\"https:\/\/www.barrons.com\/articles\/svb-silicon-valley-bank-rates-securities-693c931c\" class=\"keychainify-checked steem-keychain-checked\">reports<\/a> that <em>more than half<\/em> of SVB\u2019s $211 billion in financial assets were composed of these struggling securities at the end of 2022.<\/p>\n<p>Many contend that more oversight could have prevented the collapse of SVB and other banks. This claim might have some merit, but it also ignores that regulators themselves were asleep at the switch during SVB\u2019s collapse.<\/p>\n<div style=\"clear:both;\">\n<div id=\"om-fqmeg7lcejd7fy5oro5r-holder\">\n<\/div>\n<div id=\"om-lxkcubhhqwmdm0lkjkbp-holder\">\n<\/div>\n<\/div>\n<p>\u201cTraditional prudential regulation should have caught this,\u201d <a rel=\"nofollow\" href=\"https:\/\/twitter.com\/MarkWarner\/status\/1636415927611711488\" class=\"keychainify-checked steem-keychain-checked\">said<\/a> Sen. Mark Warner (D-Va.) during a recent Senate hearing. \u201cWhere were the regulators?\u201d<\/p>\n<p>It\u2019s a fair question, and one members of both parties <a rel=\"nofollow\" href=\"https:\/\/www.semafor.com\/article\/03\/15\/2023\/why-almost-everyone-in-washington-is-ticked-at-the-fed\" class=\"keychainify-checked steem-keychain-checked\">are asking<\/a>. Banks are supposed to undergo stress tests and similar oversight to prevent the kind of exposure that wrecked SVB. Why that didn\u2019t happen is a question we\u2019ll likely hear answered during congressional hearings, but it might have something to do with the fact that SVB\u2019s CEO <a rel=\"nofollow\" href=\"https:\/\/www.bloomberg.com\/news\/articles\/2023-03-11\/svb-ceo-becker-removed-from-sf-fed-s-board-after-bank-s-failure#xj4y7vzkg\" class=\"keychainify-checked steem-keychain-checked\">also sat on the board<\/a> of the San Francisco Federal Reserve Bank, which had regulatory oversight.<\/p>\n<p>Regulatory failure, however, should not overshadow the bank\u2019s own internal failures, which are obvious even to those without investment banking experience. <em>Why was SVB\u2019s portfolio not more diversified? Why did the bank expose itself to so much risk and hang on to its <\/em><em><a rel=\"nofollow\" href=\"https:\/\/www.wsj.com\/livecoverage\/stock-market-news-today-11-09-2022\/card\/demand-for-treasurys-has-rarely-been-so-weak-oeHDCQIPgqehM3hhMtJ7\" class=\"keychainify-checked steem-keychain-checked\">plummeting Treasury securities<\/a><\/em><em> so long?<\/em> <em>Why were so many loans <\/em><em><a rel=\"nofollow\" href=\"https:\/\/www.wsj.com\/articles\/did-esg-help-sink-svb-progressive-climate-bank-bailout-federal-reserve-treasury-biden-insurance-9db64b0b?mod=opinion_featst_pos2\" class=\"keychainify-checked steem-keychain-checked\">extended to<\/a><\/em><em> subprime borrowers?<\/em><\/p>\n<p>These are, frankly, rookie mistakes.<\/p>\n<p>\u201cThe combination of a negligent board of directors @SVB with idiot management is the potent cocktail that led to a disastrous outcome,\u201d investor and Shark Tank host Kevin O\u2019Leary <a rel=\"nofollow\" href=\"https:\/\/twitter.com\/kevinolearytv\/status\/1635005354953289728\" class=\"keychainify-checked steem-keychain-checked\">observed<\/a> on Twitter in the wake of SVB\u2019s collapse.<\/p>\n<p>O\u2019Leary is not wrong, but he didn\u2019t point out <em>why <\/em>SVB\u2019s board was negligent.<\/p>\n<p>It turns out that SVB\u2019s board of directors was rather thin on investment banking experience and <a rel=\"nofollow\" href=\"https:\/\/www.foxnews.com\/politics\/former-dems-including-clinton-donor-obama-official-dominated-svbs-board-directors\" class=\"keychainify-checked steem-keychain-checked\">heavy on political connections<\/a>. (To be fair, there\u2019s also a sound economic incentive to appoint board members with political clout.) One member of the board\u2014Tom King, who joined the board in September 2022\u2014had extensive experience in the industry, but <a rel=\"nofollow\" href=\"https:\/\/www.dailymail.co.uk\/news\/article-11859379\/Only-ONE-member-failed-SVBs-board-experience-investment-banking.html\" class=\"keychainify-checked steem-keychain-checked\">others<\/a> have relatively little or none.<\/p>\n<p>This is one of the dangers of \u201cwokeism\u201d and social justice theory. These value systems are explicitly hostile to <a rel=\"nofollow\" href=\"https:\/\/fee.org\/resources\/what-is-critical-race-theory-and-does-it-fulfill-the-civil-rights-movement-or-betray-it\/\" class=\"keychainify-checked steem-keychain-checked\" data-toggle=\"popover\">concepts like individual merit<\/a>. Baked into the ideology is the temptation to hire people based on factors\u2014race, gender, ideology, etc.\u2014other than the value they can bring to an organization; to ignore profit and shareholders, and instead serve greater social causes.<\/p>\n<p>If you doubt this, consider <a rel=\"nofollow\" href=\"https:\/\/medium.com\/authority-magazine\/women-of-the-c-suite-busy-burr-of-carrot-on-the-five-things-you-need-to-succeed-as-a-senior-aa8e78f96893\" class=\"keychainify-checked steem-keychain-checked\">this 2021 interview<\/a> with SVB board member Elizabeth &#8216;Busy&#8217; Burr. In the interview, Burr spurns focusing on \u201cnumbers.\u201d The words value and shareholder don\u2019t even appear. Her focus is equity, inclusion, and the \u201ctide of racism and white supremacy\u201d in America. Months after the interview, the Carrot CCO joined the SVB board. (Burr, unlike other board members, did actually spend several years in the investment banking space, working for Morgan Stanley and Credit Suisse First Boston, <a rel=\"nofollow\" href=\"https:\/\/www.svb.com\/news\/company-news\/svb-financial-group-appoints-elizabeth-burr-to-its-board-of-directors\" class=\"keychainify-checked steem-keychain-checked\">according to<\/a> SVB.)<\/p>\n<p>To be clear, no one denies that macroeconomic factors\u2014particularly the Federal Reserve\u2019s massive money pumping and interest rate schemes\u2014played a central role in the demise of SVB. But don\u2019t discount the impact corporate wokeism had in creating a culture that emphasized DEI initiatives and goals over creating value, earning profit, and providing proper oversight of a company managing billions of dollars.<\/p>\n<p>We\u2019re constantly being told that capitalism needs to be fixed. That it needs to be more responsible. That it must focus more on \u201cenvironmental\u201d and \u201csocial\u201d concerns. That it must include more external \u201c<a rel=\"nofollow\" href=\"https:\/\/fee.org\/articles\/is-stakeholder-capitalism-newspeak-for-economic-fascism\/\" class=\"keychainify-checked steem-keychain-checked\" data-toggle=\"popover\">stakeholders<\/a>.\u201d<\/p>\n<p>The collapse of SVB, which was preventable, shows that these efforts to \u201creform\u201d capitalism may very well be what <a rel=\"nofollow\" href=\"https:\/\/fee.org\/articles\/will-esg-reform-capitalism-or-destroy-it\/\" class=\"keychainify-checked steem-keychain-checked\" data-toggle=\"popover\">destroys it<\/a>. (The fact that federal authorities quickly stepped in to protect parties from the consequences of their decisions shows that to some extent it already has.)<\/p>\n<p>Moreover, basic economics offers yet another clue.<\/p>\n<p>Resources, we know, are finite. Each comes with an \u201copportunity cost,\u201d which means that every single service or resource\u2014including time\u2014comes at the expense of something else.<\/p>\n<p>It\u2019s worth pointing out that SVB had a DEI executive, but, astonishingly, it <a rel=\"nofollow\" href=\"https:\/\/www.foxbusiness.com\/economy\/silicon-valley-bank-had-no-official-chief-risk-officer-ahead-collapse-but-employed-a-dei-executive\" class=\"keychainify-checked steem-keychain-checked\">had no chief risk officer<\/a>. This is a big deal.<\/p>\n<p>Opportunity cost shows us the funds used to hire that diversity executive could have been used instead to hire a risk officer. Indeed, every single dollar the bank spent on diversity and inclusion and other \u201cwoke\u201d programs and initiatives could have been spent on other resources, including risk officers and stress tests that could have helped SVB identify solvency problems and limit exposure to the macroeconomic factors that precipitated its collapse.<\/p>\n<p>\u201cWokeism\u201d may not have been the primary factor for SVB\u2019s collapse, but basic economics shows it did play a role, big or small.<\/p>\n<p><script src=\"https:\/\/platform.twitter.com\/widgets.js\" defer=\"\" async=\"\"><\/script>\n<div>\n<h5>\n<a href=\"http:\/\/fee.org\/people\/jon-miltimore\/\" class=\"keychainify-checked steem-keychain-checked\"><br \/>\nJon Miltimore<br \/>\n<\/a><br \/>\n<\/h5>\n<p class=\"brief-bio\">\n<p>Jonathan Miltimore is the Managing Editor of FEE.org. (<a href=\"https:\/\/jjmilt.substack.com\/\" class=\"keychainify-checked steem-keychain-checked\">Follow him on Substack<\/a>.)<\/p>\n<p><span>His writing\/reporting has been the subject of articles in TIME magazine, The Wall Street Journal, CNN, Forbes, Fox News, and the Star Tribune.<\/span><\/p>\n<p>Bylines: Newsweek, The Washington Times, MSN.com, The Washington Examiner, The Daily Caller, The Federalist, the Epoch Times.&nbsp;<\/p>\n<\/div>\n<p style=\"font-style: italic;\">This article was originally published on FEE.org. Read the <a href=\"https:\/\/fee.org\/articles\/is-wokeism-to-blame-for-silicon-valley-bank-s-demise-no-and-yes\/\">original article<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Within days of Silicon Valley Bank\u2019s swift and shocking collapse, a narrative formed that \u201cwokeism\u201d lay at the heart of the California bank\u2019s sudden demise. It began with a Fox News appearance by Home Depot co-founder Bernie Marcus. &#8220;I feel bad for all of these people that lost all their money in this woke bank,\u201d Marcus told host Neil Cavuto. \u201cYou know, it was more distressing to hear that the bank officials sold off their stock before this happened.\u201d Similar criticism followed from rank-and-files members of the GOP, including House Oversight chairman James Comer, who decried SVB\u2019s \u201cESG-type policy and investing.\u201d The charges prompted an avalanche of media responses attempting to debunk claims that \u201cwokeness\u201d had anything to do with the collapse of SVB or the distress of other financial institutions, such as Signature Bank. \u201cThere\u2019s no evidence that SVB\u2019s sustainable investing or diversity initiatives contributed to its collapse,\u201d Washington Post business and tech reporter Julian Mark wrote. \u201cNo, diversity did not cause Silicon Valley Bank\u2019s Collapse,\u201d the New York Times assured readers in a headline. What Is \u2018Woke\u2019? Woke is a surprisingly tricky term to define\u2014just ask Bethany Mandel who recently went viral when she froze on TV after [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[15],"tags":[622,3938],"class_list":["post-30882","post","type-post","status-publish","format-standard","hentry","category-news-and-politics","tag-economics","tag-wokeism"],"_links":{"self":[{"href":"https:\/\/www.megalextoria.com\/wordpress\/index.php\/wp-json\/wp\/v2\/posts\/30882","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.megalextoria.com\/wordpress\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.megalextoria.com\/wordpress\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.megalextoria.com\/wordpress\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.megalextoria.com\/wordpress\/index.php\/wp-json\/wp\/v2\/comments?post=30882"}],"version-history":[{"count":1,"href":"https:\/\/www.megalextoria.com\/wordpress\/index.php\/wp-json\/wp\/v2\/posts\/30882\/revisions"}],"predecessor-version":[{"id":30885,"href":"https:\/\/www.megalextoria.com\/wordpress\/index.php\/wp-json\/wp\/v2\/posts\/30882\/revisions\/30885"}],"wp:attachment":[{"href":"https:\/\/www.megalextoria.com\/wordpress\/index.php\/wp-json\/wp\/v2\/media?parent=30882"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.megalextoria.com\/wordpress\/index.php\/wp-json\/wp\/v2\/categories?post=30882"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.megalextoria.com\/wordpress\/index.php\/wp-json\/wp\/v2\/tags?post=30882"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}