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Pinkerton: Green, Woke, and Now Broke — How SVB Became the 2nd Biggest Bank Failure in U.S. History
Go Woke, Go Bust
Oh so woke, oh so green, oh so diverse Silicon Valley Bank (SVB) just went bust.
One can go to its website—still up for who knows how much longer—and see that it claims 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.
Remarkably, 93 percent of the bank’s $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 CFOs—the folks in charge of handling a company’s money—are gonna have some ‘splaining to do.
Speaking of ‘splaining, SVB officials will need to answer a lot of questions, including, What role did wokeness play in SVB’s failure?Another term for wokeness, of course, is ESG, which stands for environmental, social, and governance. ESG is a pertinent question, as there’s a considerable body of economic literature showing that woke investments aren’t 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.
Shorter version: ESG makes less, costs more, and is a fraud.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. That’s what happened when bank failures domino-ed back in 1929.
So, it’s funny, in a not-funny way, that as recently as March 7, Treasury Secretary Janet Yellen was urging faster please on ESG. “A delayed and disorderly transition to a net-zero economy can lead to shocks to the financial system,” she said.
Well, we haven’t gotten to net-zero yet—and we never will, especially with China still building coal plants—but we’ve already had a shock to the financial system.
Inflation – GLASGOW, SCOTLAND – NOVEMBER 03: US Treasury Secretary Janet Yellen takes part in a CNN television interview in the Action Zone at COP26 on November 03, 2021 in Glasgow, Scotland. Day Four of COP26 is billed as Finance Day at the 2021 climate summit in Glasgow. Global political and Business leaders will discuss the role of money in achieving net zero around the world. COP26 is the 26th “Conference of the Parties” and represents a gathering of all the countries signed on to the U.N. Framework Convention on Climate Change and the Paris Climate Agreement. The aim of this year’s conference is to commit countries to net-zero carbon emissions by 2050.
U.S. Treasury Secretary Janet Yellen speaks at COP26 climate change summit on November 03, 2021, in Glasgow, Scotland.
Then there’s the question of bailing out SVB beyond FDIC requirements. As The Washington Post reported on Saturday, a “ferocious political debate” 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 spectrum—in banks, investment houses, pension funds, insurance companies, and university endowments—to 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. There’s even a new network of right-leaning investment overseers, the State Financial Officers Foundation.
So, now expect a scramble, as all the Emperors of ESG—including Al Gore, Larry Fink of BlackRock, and maybe even Bono—rush to tell us that this is fine. (As for Janet Yellen, we’ll 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.) Let’s consider SVB’s fiduciary duty as we go through the bank’s own statements. (We can leave for another time speculation about any other legal violations that might have been committed—it is, after all, quite something to blow $212 billion.)
For instance, here’s an SVB headline from January 10, 2022: “Silicon Valley Bank Commits to $5 Billion in Sustainable Finance and Carbon Neutral Operations to Support a Healthier Planet.” 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, “Our 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.”
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 doesn’t 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, that’s 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? (There’s a whole ‘nother passel of laws concerning that, and they’re doozies.)
And it gets better. Here’s more green blather from SVB:
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.
A good paragraph for Woke Bingo: “just,” “sustainable,” “healthier planet”—so many words to win!
A head of risk assessment at the beleaguered Silicon Valley Bank has been accused of prioritizing pro-diversity initiatives over her actual role after the firm imploded on Friday.
Jay Ersapah – who describes herself as a ‘queer person of color from a working-class background’ – organized a host of LGBTQ initiatives including a month-long Pride campaign and implemented ‘safe space’ catch-ups for staff.
she had authored numerous articles to promote LGBTQ awareness. These included ‘Lesbian Visibility Day and Trans Awareness week.’
Separately she was also praised in a Facebook post by the group ‘Diversity Role Models,’ a charity which campaigns against homophobic, biphobic and transphobic bullying in UK schools.
In a corporate document for the bank she said:
‘I feel privileged to help spread awareness of lived queer experiences, partner with charitable organizations, and above all create a sense of community for our LGBTQ+ employees and allies.’
Why are banks failing? Why did FTX fail?
WEF and woke ESG pic.twitter.com/SWmitKjJve
— J Gardner 🇺🇲🐊 (@jngpic) March 16, 2023
Democrats had the House, Senate, and WH for two years and did absolutely nothing because they were all in bed with FTX and SVB was pushing their woke agenda.
Don’t believe a word of these lies. t.co/9g4rkt3Qoa
— John Cardillo (@johncardillo) March 11, 2023
Woke ESG standards didn’t help SVB, FTX, or Norfolk Southern t.co/cPdLgbp5bz
— Washington Examiner (@dcexaminer) March 14, 2023
RON HART: The Woke, Still Going Broke: Slip-Sliding Down The Silicon Valley.
Last year I wrote of the risks and results of running a company as “woke.” I pointed out how “woke” companies like Disney, Netflix, Google, Facebook, Twitter, and Crypto-Creep Sam Bankman-Fried’s FTX all tanked.
All those companies terribly underperformed while pushing their self-serving, woke agenda onto gullible shareholders who accepted the companies’ self-aggrandizing virtue signaling instead of financial performance.
Part of the reason universities and companies talk so much about their “woke” agendas is that they are relieved of real accountability for the quality of education they provide or their financial performance. If you can keep pointing to all the woke things you can say you did, you can divert attention from the things that are hard, like accountability metrics: “Yes, we lost market share and profits are down, but the Accounting Department just hired our first Albino-African American-Transgendered Head of Auditing. Aren’t we cool?”
Such is the startling recent case of Silicon Valley Bank. The nation’s 16th largest bank failed last week amid virtue signaling instead of tending to its business. It’s the 2nd biggest bank failure in American history.
AC