Silicon Valley Bank

Wright and Ortiz: Don’t Let Silicon Valley Bank’s Financial Catastrophe Spill Over to These Crucial Banks

March 29, 2023 by Breitbart News Leave a Comment

Earl Wright and Alfredo Ortiz write for foxbusiness.com warning against overzealous regulation of community banks in the wake of the Silicon Valley Bank failure because they offer the majority of small business loans and an even greater proportion of farm loans:

The federal response to the ongoing banking crisis may end up having a big impact on the nation’s smallest banks that bear no responsibility for the turmoil. Community banks have an outsized impact on local economies throughout the country, so hamstringing them with new costs would have broad consequences.
. . .

Community banks provide roughly 60% of all small business loans and more than 80% of farm loans. Small banks also stepped up to deliver pandemic-era Paycheck Protection Program loans while many big banks dragged their feet. They serve rural America; approximately half of community banks are located in counties with fewer than 50,000 people.

To ensure community banks can continue providing loan services for their communities, policymakers should exempt them from new fees and regulations coming out of this crisis. Research from the Minneapolis Fed finds that the costs associated with adding only two compliance employees to bank payrolls would make one-third of community banks unprofitable.

Read the rest of the article here.

Exclusive—Derek Kreifels: SVB’s Collapse Serves as the Canary in the Coal Mine for ESG investments

March 28, 2023 by Derek Kreifels Leave a Comment

Managers of the failed Silicon Valley Bank (SVB) and President Biden share something in common: a fundamentally flawed mindset that prioritizes woke politics above the financial wellbeing of those whom they serve. That commonality was typified in their mutually misplaced devotion to Environmental, Social, and Governance (ESG) policies.

The president’s first use of his veto authority on March 20 to kill a bipartisan congressional resolution reversing ESG policies promoted by his Department of Labor means that maximizing retirement account holders’ returns will play second fiddle to progressive policy goals and that retirement portfolios are being placed in jeopardy. In SVB’s case, this distorted sense of priorities was a major factor in the bank’s collapse. As state financial officers have been warning for years, placing left-wing political considerations ahead of sound financial or business decision-making is a recipe for a disaster.

President Joe Biden speaks at the COP26 climate change talks in Glasgow, Scotland, on Nov. 2, 2021. (Robert Perry/EPA/Bloomberg via Getty Images)

Most Americans are still not familiar with ESG, which is a highly subjective political score that woke fund managers who control trillions of dollars in retirement assets are using to force progressive policies on everyday Americans—typically without their knowledge or approval. It’s a radical environmental and social agenda that the self-anointed elite behind it know they could not force through the courts and which they could never get enacted through the democratic process. The result is higher prices at the gas pump and at the store.

Instead of placing an emphasis on hiring qualified candidates for critical positions within the company and making prudent financial decisions, SVB focused on ESG, particularly climate and diversity, equity, and inclusion (DEI) initiatives. So dependable was SVB for left-leaning initiatives that SVB was referred to as “the Democratic ATM bank.” Even as it was struggling in January 2022, SVB boasted that it had committed to “at least $5 billion” to support green investments initiatives. But even more telling and most outrageously irresponsible of all, SVB left its chief risk officer position open for eight months.

SVB should have concentrated on safeguarding their depositors’ money and making sound investments, but as evidenced by their “A” ESG rating, the failed bank was too narrowly focused on pushing a progressive agenda. That political focus did nothing to help it avoid calamity.

People line up outside of the shuttered Silicon Valley Bank (SVB) headquarters on March 10, 2023, in Santa Clara, California. (Justin Sullivan/Getty Images)

ESG’s defenders have argued against those who push back by saying that it’s really about mitigating risk. Clearly SVB’s ESG advocacy didn’t aid them in understanding financial risk from over-investing in government treasuries when interest rates were rising. The bank’s financial malpractice is the inevitable outcome when fiduciary responsibility is crowded out by politicized agendas. And contrary to what Biden is pretending, the American people will ultimately be left to foot the bill for the incompetence of SVB’s leadership. Our country’s largest banks, which are too big to fail and have been working together to push their progressive ESG agenda, will benefit and grow even larger.

To make matters worse, SVB built strong ties to China and reportedly worked as a key funding bridge for groups operating between China and the United States. It even ran a joint venture in China with Shanghai Pudong Development Bank. This is especially troublesome because it means that the United States could potentially be bailing out our biggest adversary in the process of rescuing a bank whose officers’ risky ESG push guided them straight over a financial cliff.

ESG is a racket built on a weak foundation of political activism. Asset management firms, banks, and proxy advisers must shift their focus to maximizing returns and safeguarding financial assets instead of playing politics, or SVB’s tab won’t be the last one the American people end up having to cover.

Biden’s abject servility to woke political priorities has allowed him to ignore the obvious: SVB’s collapse serves as the canary in the coal mine for ESG investments. And while his veto sustains the ESG investment scheme for now, state treasurers, auditors, and other state financial officers have been pushing back on the woke scam being perpetrated on the backs of American investors.

The American people should also take notice and be vocal; this is the kind of financial freewheeling that puts their investments at risk.

Derek Kreifels is the co-founder and Chief Executive Officer of the State Financial Officers Foundation.

Peter Schweizer ‘Drills Down’ on How Bank Bailouts Rescue Clueless Silicon Valley Elites

March 28, 2023 by Breitbart News Leave a Comment

Schweizer: It’s what you call an incestuous relationship between government and business.

On the latest episode of the Drill Down podcast, Government Accountability Institute President and New York Times bestselling author Peter Schweizer and GAI Vice President Eric Eggers tackle the recent failure of Silicon Valley Bank – and reveal California Gov. Gavin Newsom’s personal interest in the bank’s bailout.

“This was ‘the elite’ —this was the ‘Silicon Valley elite,’ Schweizer says of the SVB depositors, adding that much of SVB’s cash was invested in Environmental Social Governance initiatives which, in many cases, didn’t even make a product.

“Maybe people are right to be worried,” Eggers says of SVB’s demise.

On the other hand, Eggers stresses that if some of the cutting-edge tech companies doing business with the bank were allowed to fail, China could swoop in and buy everything “on the cheap,” putting America in a potentially compromised, weakened position.

“I think we should restrict China from buying up any of these companies,” Schweizer confirms adamantly.

“[ESG] businesses generally don’t make money,” Schweizer says, adding that SVB got caught with its pants down with too much money in too many green businesses.

Schweizer and Eggers expose California Governor Gavin Newsom’s personal interest in bailing out Silicon Valley Bank, including Newsom’s business connections to SVB and his shakedown for his wife’s charity. At Newsom’s request, the bank donated $100,000 to his wife’s charity, the California Partners Project, and later advocated the bank’s bailout. “It’s what you call an incestuous relationship between government and business,” Schweizer says.

To listen to the Drill Down Podcast – click here.

First Citizens Steps up to Buy Failed Silicon Valley Bank

March 27, 2023 by Simon Kent Leave a Comment

North Carolina-based First Citizens Bank and Trust has purchased Silicon Valley Bank (SVB), the tech industry favorite that collapsed earlier this month amidst an historic bank run.

The agreement involves the sale of all deposits and loans of SVB to First-Citizens, the Federal Deposit Insurance Corporation (FDIC) said in a statement late Sunday night.

AP reports customers of SVB automatically will become customers of First Citizens, which is headquartered in Raleigh. The 17 former branches of SVB will open as First Citizens branches when business begins Monday.

Regulators shut Silicon Valley down on March 10 when it had about $167 billion in total assets and roughly $119 billion in deposits. The move prompted the FDIC and other regulators to act to protect depositors to prevent wider financial turmoil, as Breitbart News reported.

“Oh so woke, oh so green, oh so diverse Silicon Valley Bank (SVB) just went bust.” https://t.co/hazi9LHVvw
— Breitbart News (@BreitbartNews) March 12, 2023

The bank, based in Santa Clara, California, went under after depositors rushed to withdraw money amid fears about the bank’s health. It was the second-largest bank collapse in U.S. history after the 2008 failure of Washington Mutual.

The turmoil also spread to Europe, where troubled Swiss lender Credit Suisse was taken over by UBS.

Most recently, shares in long-troubled Deutsche Bank fell heavily on Friday on the lender’s surging cost of default cover, reigniting fears about a widening banking sector crisis.

The acquisition of SVB by First Citizens gives the FDIC shares in the latter worth $500 million, according to AP.

Both the FDIC and First Citizens will share in losses and the potential recovery on loans included in a loss-share agreement, the FDIC said.

Watch: Worried Customers Line Up Outside SVB Branch in Boston

Chris Grondin via Storyful

Silicon Valley Bank UK was sold to to HSBC, Europe’s biggest bank, three days after the U.S. collapse thus ensuring the security of 6.7 billion pounds ($8.1 billion) of deposits.

A nominal £1 ($1.2) was paid for the acquisition.

First Citizens Bank was founded in 1898 and says it has more than $100 billion in total assets, with more than 500 branches in 21 states as well as a nationwide bank. It reported net profit of $243 million in the last quarter, according to AP.

Follow Simon Kent on Twitter: Follow @SunSimonKent or e-mail to: [email protected]

Exclusive—Louisiana Attorney General Jeff Landry: What SVB Says About ESG

March 25, 2023 by Jeff Landry Leave a Comment

It has long been known within the world of innovation that the opinion of investors is often based on the opinions of other investors.

In fact, many flock to the same startups once momentum begins to build; and in some cases, that mad dash to a supposedly safe bet burns out like a flash in a pan. Interestingly, this same pattern of human behavior works in the reverse as well. As soon as it became clear that Silicon Valley Bank (SVB) had failed, the mad dash went in the opposite direction, with stakeholders desperate to retrieve their money in the first major bank failure in over a decade.

Of course, within Silicon Valley, it’s acceptable among startup investors to not understand the technology and place bets based on the leadership qualities and character of a founder; but it is still not acceptable, even there, for a bank to not understand risk management and bet on incompetent leaders. Perhaps this is why most startups fail while most banks do not. Yet SVB’s management behaved like a group of nervous founders straight out of college who only know how to talk equity and inclusion rather than liquidity and interest rates. And SVB is certainly not alone here.

While some may disagree with the view that businesses exist to solve problems, I think it’s clear that SVB was focused on solving the wrong ones, placing far too much emphasis on diversity between the sheets rather than in its portfolio.

However, mega-companies such as BlackRock, led by the formidable Larry Fink, are guilty of placing the very same emphasis on Environmental, Social, and Governance (ESG) ratings rather than focusing on shareholder returns — which is why I encouraged Louisiana’s Treasurer to divest from the investment management company and protect our state pensions. Still, many would have you believe that the failure of SVB has nothing to do with ESG, which is why I think it’s time we take a hard look at the objective reality before us.

BlackRock CEO Larry Fink speaks at the annual meeting of the World Economic Forum in Davos, Switzerland on Jan. 20, 2017. (AP Photo/Michel Euler)

BlackRock has been riding a wave of momentum built on the backs of inexperienced investors who believe ESG is not only a good bet but a safe one. And because Fink likely believes in his fantastic dogma of global transformation, his confidence has trickled down to eager investors who want to feel confident too. It’s taken such a hold over some that Fink was able to openly declare his preference for totalitarianism as a way to manage uncertainty in markets, while Joe Biden followed suit in perfect lockstep, pushing companies and banks to abandon common sense business practices in favor of woke ideology.

Meanwhile, Fink doesn’t have to prove that his vision for the future will succeed; he just needs to make investors feel safe and secure in his ability to make that happen. The failure of SVB and others is calling his bluff. And I believe that is why some in the liberal press have denounced their political opponents for pointing out the obvious: the emperor has no clothes!

Louisiana Attorney General Jeff Landry (Jeff Landry/Facebook)

To state otherwise, or continue to argue in favor of this utopian dream, is merely a ploy to keep the bulk of investors corralled within the ESG pen, lest they get the sudden urge to start another mad dash away from this supposedly beautiful future. Of course, in the woke mind, there’s nothing worse than being called a conservative, or gasp — a capitalist! Then again, they also believe business savvy and hard work for financial gain are taboo, arguing that all financial security should be handed down by the state.

So, why, I ask, are these people managing our money to begin with? And where’s the “safe space” from them?

Jeff Landry is the attorney general of Louisiana and a former U.S. representative.