WEBVTT - Don't Call It A "Bailout", But It's a Massive Big Tech & China Bailout 0:00:01.080 --> 0:00:04.480 Welcome. Its verdict was Senator Ted Cruz Ben Ferguson with 0:00:04.559 --> 0:00:07.480 you and Senator the biggest news story of the week. 0:00:07.600 --> 0:00:12.119 Many Americans are concerned about their banks. They're concerned about banking. 0:00:12.520 --> 0:00:16.200 They're concerned about what's happened with a fallout of Silicon 0:00:16.560 --> 0:00:18.959 Valley Bank. This wasn't a little bank. This was a 0:00:19.000 --> 0:00:21.720 big bank. It was one of the top three failures 0:00:21.720 --> 0:00:24.919 of my lifetime. I want to get your initial reaction 0:00:25.040 --> 0:00:28.120 to this and what you've heard, at least from those 0:00:28.160 --> 0:00:30.160 in Washington that were supposed to be keeping an eye 0:00:30.160 --> 0:00:33.400 on this bank and many others every day. Well, this 0:00:33.479 --> 0:00:36.720 has been a very chaotic time in the markets. We've 0:00:36.760 --> 0:00:40.640 seen two different banks fail, including the sixteenth largest bank 0:00:40.680 --> 0:00:43.080 in the United States, Silicon Valley Bank, with two hundred 0:00:43.080 --> 0:00:46.720 and ten billion dollars in assets. That has called into 0:00:46.800 --> 0:00:50.840 question a lot of the financing for the tech industry. 0:00:51.479 --> 0:00:53.760 It's called into question a lot of the financing for 0:00:53.840 --> 0:00:59.400 venture capital, and it has potentially imperiled a significant number 0:00:59.400 --> 0:01:03.960 of midside banks. In response to this, the Biden administration 0:01:04.160 --> 0:01:09.919 rolled out a major bailout, conveniently bailing out the politically 0:01:09.920 --> 0:01:14.800 collected connected friends of the Biden White House in a 0:01:14.840 --> 0:01:19.240 way that we'll have lasting repercussions for the economy and 0:01:20.360 --> 0:01:27.000 will almost certainly incentivize future bad conduct by other banks. 0:01:27.959 --> 0:01:30.480 When you look at this from a standpoint of it 0:01:30.520 --> 0:01:33.360 being called a bailout, a lot of people have been 0:01:33.360 --> 0:01:37.000 calling it that, but this administration keeps saying, this is 0:01:37.040 --> 0:01:40.720 not a bailout. Is this a bailout? Or the taxpayers 0:01:40.760 --> 0:01:42.959 going to have to put the bill for this? Is 0:01:42.959 --> 0:01:46.280 this a delayed bill for taxpayers? How should the American 0:01:46.319 --> 0:01:50.840 people be reacting to this? This is one of bailout, 0:01:51.240 --> 0:01:55.640 and the Biden administration is spinning like crazy trying to 0:01:55.680 --> 0:02:00.280 pretend that it's not. What they are arguing is the money. 0:02:00.360 --> 0:02:02.800 There's one hundred and twenty billion dollars in a fund 0:02:03.720 --> 0:02:06.000 that is paid by banks, and they say, well, that's 0:02:06.000 --> 0:02:09.519 not taxpayer money. Well, the last time I checked banks 0:02:09.600 --> 0:02:12.080 or taxpayers, banks pay quite a bit in taxes. Not 0:02:12.160 --> 0:02:15.200 only that, but the fees that the banks are paying 0:02:15.240 --> 0:02:20.639 into this fund they get from in turn extracting revenues 0:02:20.680 --> 0:02:23.960 from consumers, and so it comes from you and me. 0:02:24.040 --> 0:02:25.799 At the end of the day. This money didn't grow 0:02:25.840 --> 0:02:29.600 on a magic money tree that the Biden administration has 0:02:29.720 --> 0:02:33.320 that they decided to spend well over one hundred billion 0:02:33.400 --> 0:02:36.320 dollars in response to this. And here's what happened. So, 0:02:36.400 --> 0:02:40.240 Silicon Valley Bank has two hundred and ten billion dollars 0:02:40.280 --> 0:02:47.160 in assets, and a big chunk of its portfolio was 0:02:47.639 --> 0:02:52.600 held in securities and in particular long term government debt. 0:02:53.760 --> 0:02:57.680 And in fact, it had the highest securities portfolio as 0:02:57.680 --> 0:03:04.040 a percentage of total assets of any bank, and it 0:03:04.120 --> 0:03:08.560 took long term government debt. But then the Fed's policies 0:03:09.400 --> 0:03:14.440 raising interest rates made that government debt made those bonds 0:03:14.760 --> 0:03:19.000 go down in value about twenty percent. And what happened 0:03:19.160 --> 0:03:23.600 is that the bank was required to mark to market 0:03:23.639 --> 0:03:28.280 those securities at their current valuations. Now, if it held 0:03:28.320 --> 0:03:32.639 those government bonds to maturity, it would get the full payout, 0:03:33.240 --> 0:03:37.400 but their worth about twenty percent less because the interest 0:03:37.480 --> 0:03:40.640 rates they were taken out at are significantly lower than 0:03:40.680 --> 0:03:45.440 where interest rates are today. That in turn caused an 0:03:45.440 --> 0:03:48.800 old fashioned run on the bank, which is depositors and 0:03:48.880 --> 0:03:53.480 in particular venture capital companies and tech companies began removing 0:03:53.520 --> 0:03:58.000 their funds in mass, and it was one after the 0:03:58.040 --> 0:04:01.240 other after the other that began pulling their their funds out. Now, look, 0:04:01.280 --> 0:04:04.920 we all know, uh from from classic movies like It's 0:04:04.920 --> 0:04:09.520 a Wonderful Life, that that a bank doesn't have all 0:04:09.560 --> 0:04:12.120 of the deposits just sitting there in cash, that it 0:04:12.120 --> 0:04:16.840 it in the case of an snlor or a mortgage bank, 0:04:16.920 --> 0:04:21.839 it is loaning them out. Uh. In in this instance, 0:04:21.920 --> 0:04:25.240 the bulk of the funds were in securities, including in 0:04:25.279 --> 0:04:29.200 particular both government debt and mortgage bonds. And so when 0:04:29.720 --> 0:04:32.240 when a ton of the depositors are saying, give me 0:04:32.320 --> 0:04:36.080 my money back, uh, they ran ran into real trouble 0:04:36.080 --> 0:04:39.840 because there was a liquidity mismatch. In other words, the 0:04:39.839 --> 0:04:43.600 the assets they had available to give the depositors back 0:04:43.640 --> 0:04:47.440 where were less than the demand for from the depositors 0:04:47.440 --> 0:04:51.200 to get it back. And so California stepped in and 0:04:51.360 --> 0:04:57.640 shut the bank down on Friday. Uh. And what happened 0:04:57.720 --> 0:05:03.040 next was a series of things. So one consequence, the FDIC, 0:05:03.360 --> 0:05:08.280 the Federal Deposit Insurance Corporation, insures deposits up to two 0:05:08.320 --> 0:05:10.400 hundred and fifty thousand dollars. So if you or I 0:05:10.600 --> 0:05:14.000 have our checking account or savings accounts, most of us 0:05:14.000 --> 0:05:16.680 presumably have less than two hundred and fifty thousand dollars 0:05:16.720 --> 0:05:20.640 in our checking or savings accounts. Those are entirely insured 0:05:20.680 --> 0:05:22.680 by the government. And that's true for anyone that has 0:05:22.760 --> 0:05:25.400 less than two hundred and fifty thousand. That's also true 0:05:25.400 --> 0:05:28.520 for smaller businesses, for mom and pop businesses, smaller businesses, 0:05:29.360 --> 0:05:32.600 but above two hundred and fifty thousand, that is not 0:05:32.720 --> 0:05:37.840 supposed to be insured by the FDIC. And in the 0:05:37.920 --> 0:05:42.000 case of Silicon Valley Bank, a massive amount ninety six 0:05:42.120 --> 0:05:46.440 percent of their deposits were uninsured. In other words, it 0:05:46.520 --> 0:05:51.320 had a bunch of big, big, big deposit accounts way 0:05:51.400 --> 0:05:54.280 above the two hundred and fifty thousand dollars insurance cap. 0:05:55.440 --> 0:06:00.760 The folks that had deposits in Silicon Valley Bank that 0:06:00.960 --> 0:06:04.279 were above the two hundred and fifty thousand dollars insurance 0:06:04.320 --> 0:06:09.120 cap include a ton of politically connected venture capital firms 0:06:09.200 --> 0:06:14.719 in Silicon Valley and startups. So, for example, Circle, the 0:06:14.760 --> 0:06:20.839 payment technology firm, had three point three billion dollars in 0:06:20.960 --> 0:06:23.520 Silicon Valley Bank. That's a bunch of money. Three point 0:06:23.560 --> 0:06:27.160 three billion is way way way above two hundred and 0:06:27.200 --> 0:06:30.920 fifty thousand. There were a total of one thousand and 0:06:31.000 --> 0:06:35.080 seventy four private equity and venture capital funds that were 0:06:35.120 --> 0:06:38.440 banking with Silicon Valley Bank. And if you look at 0:06:38.880 --> 0:06:42.400 some of the players. In addition to Circle, Roku, the 0:06:42.480 --> 0:06:45.920 streaming service, had four hundred and eighty seven million dollars 0:06:45.920 --> 0:06:51.200 in Silicon Valley Bank. The crypto lender Block five, which 0:06:51.240 --> 0:06:56.760 is now defunct, had two hundred and twenty seven million. Roadblocks, 0:06:57.440 --> 0:07:02.240 the online gaming platform had one hundred and fifty million, 0:07:03.080 --> 0:07:09.240 and BuzzFeed, the online media platform, had about fifty six 0:07:09.360 --> 0:07:12.000 million in cash and cash equivalence at the end of 0:07:12.320 --> 0:07:15.080 twenty twenty two, the majority of which was held at 0:07:15.120 --> 0:07:18.119 Silicon Valley Bank. So you have a lot of big 0:07:18.160 --> 0:07:22.560 players with huge amounts of money. Now, these players chose 0:07:22.560 --> 0:07:26.200 to deposit it knowing what the FDIC limits were. They 0:07:26.200 --> 0:07:28.960 didn't seek to ensure it, they didn't seek to find 0:07:29.000 --> 0:07:33.720 any other way to protect it. They counted on number 0:07:33.760 --> 0:07:36.360 one that they believe Silicon Valley Bank was too big 0:07:36.400 --> 0:07:40.640 to fail. But number two what happened is the White 0:07:40.680 --> 0:07:45.760 House very quickly responded to Democrat politicians and tech firms 0:07:45.760 --> 0:07:52.920 and VC firms expressing dismay, and the Biden administration said, 0:07:52.960 --> 0:07:56.080 you know what, We're going to guarantee every deposit doesn't 0:07:56.080 --> 0:08:00.520 matter how big that was. Any way, you look at 0:08:00.560 --> 0:08:06.080 it a massive bailout, and it was a bailout that 0:08:06.320 --> 0:08:11.520 was done, was done with no authorization from Congress. You know, 0:08:11.600 --> 0:08:16.920 you think back to the financial crisis that we saw 0:08:17.040 --> 0:08:19.760 in two thousand and eight. Two thousand and eight, there 0:08:19.800 --> 0:08:22.120 was a financial crisis and there was a massive bailout. 0:08:22.120 --> 0:08:24.760 And what happened there The George W. Bush administration went 0:08:24.800 --> 0:08:28.440 to Congress and they seek sought to pass what was 0:08:28.480 --> 0:08:33.360 called TARP, the Troubled Asset Recovery Program, and the first time, 0:08:33.400 --> 0:08:35.640 in fact, the House of Representatives voted it down and 0:08:36.320 --> 0:08:39.959 didn't give the Bush administration the bailouted asked for. Then 0:08:40.040 --> 0:08:45.520 ultimately it did, and actually the response to TARP prompted 0:08:46.080 --> 0:08:50.839 in significant part the Tea Party, the enormous wave of 0:08:51.240 --> 0:08:54.720 fed up voters that were very unhappy. Why rich connected 0:08:54.760 --> 0:09:00.559 bankers were getting billions in government money. It king here. 0:09:00.600 --> 0:09:04.360 The Biden administration didn't go to Congress, didn't think Congress 0:09:04.360 --> 0:09:06.559 had anything to say at all. They just announced it, 0:09:07.040 --> 0:09:11.760 we're giving away money. Why because these are Democrat donors 0:09:11.760 --> 0:09:15.040 and people we listen to, and you know what, mom 0:09:15.040 --> 0:09:17.360 and pop across this country are going to pay more. 0:09:17.480 --> 0:09:21.280 Local community banks in Texas and all across the country 0:09:21.520 --> 0:09:24.079 are going to end up paying more because the Biden 0:09:24.120 --> 0:09:28.719 administration decided to bail out Silicon Valley Bank and to 0:09:29.720 --> 0:09:36.400 ignore the FDIC cap and give unlimited guarantees on deposits. Senator, 0:09:36.440 --> 0:09:38.200 I want to ask you a question, and this really 0:09:38.280 --> 0:09:42.000 is a political one, about the money that was coming 0:09:42.160 --> 0:09:46.160 out of Silicon Valley Bank. We've now been told that 0:09:46.240 --> 0:09:50.840 apparently they had given more than seventy three million in 0:09:51.000 --> 0:09:55.920 donations to Black Lives Matter and related organizations. 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Right, and 0:10:58.440 --> 0:11:00.800 you're supposed to have a limit to the first two 0:11:00.880 --> 0:11:03.240 hundred and fifty thousand hours of your deposits in a bank. 0:11:03.559 --> 0:11:05.640 But what Biden basically said is, hey, this is a 0:11:05.640 --> 0:11:09.680 woke liberal bank, and we cover it all. Even though 0:11:09.679 --> 0:11:11.839 the people that were putting the money in the bank 0:11:11.920 --> 0:11:15.040 knew that they were overly leveraged here, that they didn't 0:11:15.080 --> 0:11:19.280 have as sound of a lending practice as many other banks, 0:11:19.280 --> 0:11:22.000 they didn't care. So are we now at the point 0:11:22.000 --> 0:11:24.720 where we have a government that says, Okay, you can 0:11:24.800 --> 0:11:30.560 act recklessly in the financial industry, specifically in banking, as 0:11:30.640 --> 0:11:33.040 long as you are in the right side of giving 0:11:33.080 --> 0:11:36.520 to democrats or to parties, We'll cover you no matter 0:11:36.600 --> 0:11:38.880 how reckless you are no matter how big you are, 0:11:39.240 --> 0:11:41.720 and as long as you're on our team and donating 0:11:41.720 --> 0:11:44.240 to things that we believe in, will get your back 0:11:44.360 --> 0:11:48.800 up to one hundred percent of all of your deposits. Look, 0:11:48.840 --> 0:11:50.800 they're an awful lot of folks. They're going to take 0:11:50.920 --> 0:11:55.359 exactly that message from this. This was an act of cronyism. 0:11:56.600 --> 0:11:59.960 It was also critically your right that Silicon Valley Bank 0:12:00.120 --> 0:12:02.400 was one of the most woke banks in America. It 0:12:02.480 --> 0:12:05.760 was very into ESG, it was very into climate change, 0:12:06.240 --> 0:12:08.280 was very into Black Lives matter, it was very into 0:12:08.280 --> 0:12:12.600 everything except apparently having a risk management process to protect 0:12:12.679 --> 0:12:18.079 its depositors deposits and in fact, stunningly, Silicon Valley Bank 0:12:18.240 --> 0:12:21.840 for a year prior to this didn't even have a 0:12:22.520 --> 0:12:26.560 chief risk management officer at a bank that's pretty damn important. 0:12:27.280 --> 0:12:32.959 They didn't have this hedged against interest rate risk. They 0:12:32.960 --> 0:12:35.760 were gambling that the FED would not raise rates, even 0:12:35.760 --> 0:12:38.400 though they'd been screaming from the mountaintops that they were 0:12:38.400 --> 0:12:41.760 going to raise rates. A bank that is being prudent 0:12:41.800 --> 0:12:46.360 can hedge its investments against interest rates rising by by 0:12:46.400 --> 0:12:50.760 investing also in counterbalancing investments that will go up when 0:12:50.760 --> 0:12:53.920 interest rates go up. They didn't do that. They were 0:12:53.960 --> 0:12:58.680 focused on on virtue signaling. They were focused on showing 0:12:58.800 --> 0:13:03.480 just how woke they are. And it's important understand also 0:13:03.520 --> 0:13:08.480 look back the bank here. These bank officers were bad actors. 0:13:08.840 --> 0:13:10.880 Let me let me tell you two data points that 0:13:10.960 --> 0:13:18.720 have been vastly underreported. Number one, hours before the bank 0:13:18.840 --> 0:13:24.599 was shut down, Silicon Valley Bank gave very substantial bonuses 0:13:25.120 --> 0:13:30.520 to all of its employees. They just began writing checks 0:13:30.559 --> 0:13:36.040 to everyone hours before they were shut down. Data point 0:13:36.120 --> 0:13:39.840 number two, in the two weeks prior to their being 0:13:39.880 --> 0:13:47.320 shut down, the CEO and the CFO sold large amounts 0:13:47.320 --> 0:13:50.040 of stock. The CEO ended up making over a two 0:13:50.040 --> 0:13:53.640 million dollar profit from selling stock less than two weeks 0:13:53.679 --> 0:13:58.760 before the bank was shut down. Both of those indicate 0:13:58.880 --> 0:14:02.200 corrupt intent. I'll tell you I had a conference call 0:14:04.880 --> 0:14:08.360 in the last forty eight hours with all one hundred 0:14:08.360 --> 0:14:12.200 senators were invited to participate, and Treasury in the FDIC 0:14:12.520 --> 0:14:14.520 was on there, and I asked, I said, look, is 0:14:14.559 --> 0:14:19.160 it true that they gave bonuses to their employees? Number one, 0:14:20.040 --> 0:14:23.800 If so, I think it is outrageous. And number two, 0:14:24.760 --> 0:14:28.360 has there been any investigation into clawing back those bonuses 0:14:29.200 --> 0:14:32.840 that because they're literally this. As far as I'm concerned, 0:14:32.840 --> 0:14:35.600 this is like Bonnie and Clyde. They're robbing the bank 0:14:36.400 --> 0:14:39.280 as they know their customers deposits are about to get 0:14:39.280 --> 0:14:43.080 blown up. And much of the media coverage has ignored 0:14:43.920 --> 0:14:49.040 the exceptionally bad conduct by the bank's officers. You look 0:14:49.040 --> 0:14:52.400 at Joe Biden and one of the things that I 0:14:52.440 --> 0:14:55.480 think is very concerning about this Biden bail out. That's 0:14:55.480 --> 0:14:58.160 what it is, we should call it. That is the 0:14:58.600 --> 0:15:02.160 question now? Is this it's a big step towards government 0:15:02.280 --> 0:15:05.960 control of the banking system. Because if the government can 0:15:06.040 --> 0:15:09.280 choose winners and losers, and those are supposed to be 0:15:09.360 --> 0:15:13.720 giving oversight of the banks are not doing it. That's 0:15:13.760 --> 0:15:17.760 another huge problem here. And many people may not understand this, 0:15:17.800 --> 0:15:19.760 and I want you to explain it for people. The 0:15:19.880 --> 0:15:23.320 San Francisco Fed was who was supposed to be supervising 0:15:23.360 --> 0:15:26.800 this bank. They either were asleep at the wheel or 0:15:26.920 --> 0:15:31.120 didn't care that they were acting this way. And if 0:15:31.560 --> 0:15:33.480 this is what the government's going to do, is this 0:15:33.640 --> 0:15:36.160 almost a play where they say, Hey, we're just going 0:15:36.200 --> 0:15:38.720 to have a United States government now that is in 0:15:38.800 --> 0:15:42.000 total control of the banking system that would be terrible 0:15:42.040 --> 0:15:46.520 for this country. Well, the banking system right now is 0:15:46.560 --> 0:15:50.800 already heavily regulated, and bank regulators are deeply involved in 0:15:50.880 --> 0:15:53.800 examining the books, and they should be involved. That there 0:15:53.880 --> 0:15:56.440 is a very important role for bank regulators to make 0:15:56.480 --> 0:16:01.320 sure that banks are being honest in our have sufficient liquidity, 0:16:01.360 --> 0:16:05.200 and are sufficiently financed. I will note that this crisis 0:16:05.280 --> 0:16:09.960 Number one was heavily encouraged by government policy, and in particular, 0:16:10.000 --> 0:16:13.960 the FED for years pursued an easy money policy of 0:16:14.040 --> 0:16:18.080 quantitative easing of virtually zero percent interest rates that was 0:16:18.280 --> 0:16:23.520 flooding the system with cash. Number two, the federal government 0:16:23.600 --> 0:16:28.320 also treated long term government debt as essentially risk free, 0:16:28.520 --> 0:16:33.600 zero risk government debt. Dodd Frank, rammed through by the Democrats, 0:16:33.680 --> 0:16:38.520 heavily encouraged banks to invest in long term government debt. Now, 0:16:39.000 --> 0:16:41.960 one thing that does is it helps finance the massive 0:16:42.040 --> 0:16:45.320 debt that the Democrats are racking up on their spending spree. 0:16:45.320 --> 0:16:49.480 They want banks incentivized to buy that debt. But Number two, 0:16:49.720 --> 0:16:54.880 that may make sense in a non inflation inflationary environment, 0:16:54.960 --> 0:16:58.640 but when inflation exploded under Joe Biden and the Fed 0:16:58.760 --> 0:17:03.000 was forced to raise rate suddenly, that long term government debt. 0:17:02.760 --> 0:17:07.119 You you had a spread there that severely reduced the 0:17:07.240 --> 0:17:10.879 value of those bonds, and it was government policies that 0:17:11.040 --> 0:17:13.879 encouraged it on the front end, but then on the 0:17:13.880 --> 0:17:17.200 back end. You were absolutely right. The regulator of Silicon 0:17:17.280 --> 0:17:21.800 Valley Bank was the San Francisco Fed. The San Francisco 0:17:21.880 --> 0:17:25.119 Fed bears an enormous amount of responsibility for what happened, 0:17:25.119 --> 0:17:27.399 because this wasn't subtle, This was out in the open, 0:17:28.160 --> 0:17:32.080 this was it was obvious. Silicon Valley Bank was not 0:17:32.240 --> 0:17:36.560 hiding from the regulators that it had massive amounts in 0:17:36.800 --> 0:17:40.320 long term government debt. The FED obviously knew that the 0:17:40.400 --> 0:17:45.119 Fed was raising interest rates, and yet this exposure, and 0:17:45.800 --> 0:17:51.159 the Fed presumably knew that this interest rate exposure was 0:17:51.200 --> 0:17:54.800 not hedged. And so you have to ask what the 0:17:54.920 --> 0:17:58.359 hell happened at the San Francisco Fed. You don't you 0:17:58.400 --> 0:18:02.040 go look at the San Francisco Fed website. They, again, 0:18:02.680 --> 0:18:05.680 like Silicon Valley Bank, have all sorts of woke things 0:18:05.720 --> 0:18:09.359 on there about ESG and climate change, in black lives 0:18:09.400 --> 0:18:13.720 matter that was their priority, but actually doing their job. 0:18:14.800 --> 0:18:18.719 It is striking that the San Francisco Fed did nothing 0:18:18.840 --> 0:18:22.320 until it was too late. Will there be any accountability 0:18:22.440 --> 0:18:26.280 for the government regulators, specifically in San Francisco on this, 0:18:26.720 --> 0:18:30.159 and is there anything that Washington can actually do to 0:18:30.280 --> 0:18:33.920 hold them accountable, Because if you basically simplify this, you 0:18:34.000 --> 0:18:36.840 pretty much had a group of wealthy speculators that got 0:18:36.840 --> 0:18:40.160 really upset that their money ended up being locked into 0:18:40.200 --> 0:18:43.160 a ten year obligation at less than a two percent return. 0:18:43.560 --> 0:18:45.800 That's how one person put it. So then they basically said, 0:18:45.800 --> 0:18:48.480 all right, we'll convince the government it was in everyone's 0:18:48.520 --> 0:18:50.359 best interest to help them out of their jam at 0:18:50.359 --> 0:18:54.479 the expense of everyone else. And the Fed, who's supposed 0:18:54.520 --> 0:18:57.640 to be looking at this, watching this bank, they just 0:18:57.720 --> 0:19:01.399 didn't do a darn thing. Well, there needs to be accountability, 0:19:01.400 --> 0:19:03.240 and I do have a high level of confidence that 0:19:03.320 --> 0:19:05.520 at a minimum, there'll be accountability in the House, that 0:19:05.600 --> 0:19:08.840 the House is going to hold the regulators to account. 0:19:08.960 --> 0:19:12.800 What what Joe Biden and the Democrats and what the 0:19:12.840 --> 0:19:15.080 corporate media are trying to do is, of course, blame 0:19:15.119 --> 0:19:17.359 it all on Trump because that's the that's their answer 0:19:17.400 --> 0:19:19.680 for everything. But if you look at who the bank 0:19:19.720 --> 0:19:22.200 regulators were that were in charge of it, it wasn't Trump. 0:19:22.200 --> 0:19:24.920 Trump's been out of office for over two years. It 0:19:25.000 --> 0:19:29.600 was the Biden administration asleep at at the wheel. And 0:19:30.119 --> 0:19:34.560 when you look at it, also look the moral hazard 0:19:34.640 --> 0:19:38.960 this will create is dangerous and it's a basic principle. 0:19:39.440 --> 0:19:45.439 When you socialize the risk and you individualize the benefits, 0:19:46.440 --> 0:19:50.639 you always get bad behavior. Silicon Valley Bank, but was 0:19:51.520 --> 0:19:56.080 behaving according to the incentives that they were getting from 0:19:56.080 --> 0:19:58.959 the Biden administration. They believe they'd be bailed out. And 0:19:59.000 --> 0:20:02.760 in particular, look at it's worth noting the bailout it 0:20:03.280 --> 0:20:07.280 is not even directed at Silicon Valley Bank, at its stockholders, 0:20:07.359 --> 0:20:10.480 that they have not been bailed out, at least not yet. 0:20:11.760 --> 0:20:13.800 The people who were bailed out were all of the 0:20:13.880 --> 0:20:18.199 depositors that had tens of millions or hundreds of millions 0:20:18.280 --> 0:20:21.320 or even billions of dollars in Silicon Valley Bank. By 0:20:21.320 --> 0:20:26.640 the way, among many of those depositors billions of dollars 0:20:26.640 --> 0:20:30.320 worth were Chinese companies. Silicon Valley Bank one of the 0:20:30.480 --> 0:20:35.000 things that specialized in was was doing banking for foreign companies, 0:20:35.080 --> 0:20:38.439 foreign investors, and so this was also a bailout of 0:20:38.600 --> 0:20:44.080 China by the Biden administration. But you know what ordinarily 0:20:44.119 --> 0:20:46.760 happens when a bank fails, and listen, we've seen banks fail. 0:20:46.840 --> 0:20:50.119 That's part of how the system operates. When the bank 0:20:50.240 --> 0:20:54.879 managers take on too much risk, the bank should fail 0:20:55.080 --> 0:20:57.320 because you don't want to incentivize. You don't want to 0:20:57.320 --> 0:21:01.720 have everyone taking on too much risk. K. But what 0:21:01.920 --> 0:21:05.239 ordinarily happens when a bank fails is number one, they 0:21:05.240 --> 0:21:08.680 try to find a private buyer, and they did try 0:21:08.720 --> 0:21:11.280 to do that over the weekend, and apparently they were 0:21:11.359 --> 0:21:16.040 unable to do so. There were several bids submitted, but 0:21:16.160 --> 0:21:18.600 the Biden FDIC refused to take any of the bids. 0:21:18.640 --> 0:21:20.720 They found the terms unacceptable. Now we don't know what 0:21:20.760 --> 0:21:23.440 those terms were. I can tell you in the call 0:21:23.480 --> 0:21:26.320 with the senators. We asked them and they didn't tell us. 0:21:26.320 --> 0:21:28.200 They didn't want people to know what the terms were. 0:21:28.720 --> 0:21:32.000 But the Biden administration turned down a private buyer that 0:21:32.040 --> 0:21:34.520 could come in and take over the bank, which is 0:21:34.600 --> 0:21:39.480 ordinarily what happens. Also, ordinarily what happens when a bank 0:21:39.560 --> 0:21:42.080 fails is that everyone's deposits up to two hundred and 0:21:42.080 --> 0:21:47.120 fifty thousand dollars get held completely harmless, and those are 0:21:47.119 --> 0:21:50.920 guaranteed by the FDIC and the larger deposit holders. Typically 0:21:51.600 --> 0:21:54.480 they're not blown out there. They're larger. Deposits are not 0:21:54.560 --> 0:21:58.119 typically worthless, but they usually take a haircut somewhere in 0:21:58.160 --> 0:22:01.480 the fifteen to twenty percent range. And that's what ordinarily 0:22:01.520 --> 0:22:03.919 happens when you put a whole bunch of money in 0:22:04.000 --> 0:22:08.879 one place at risk without it being insured. All of 0:22:08.920 --> 0:22:12.479 the depositors knew that, but they also knew that with 0:22:12.520 --> 0:22:16.160 their friends and the Biden administration that they could count 0:22:16.200 --> 0:22:20.280 on higher returns from Silicon Valley Bank playing fast and loose, 0:22:20.359 --> 0:22:23.960 and if things went south, I think they were confident 0:22:24.040 --> 0:22:28.359 that Democrats in Washington would have their back. Last question 0:22:28.359 --> 0:22:31.640 on this for you, Senator. They're obviously having two banks 0:22:31.680 --> 0:22:35.320 back to back collapse is going to make people uneasy. 0:22:35.640 --> 0:22:38.360 When you guys were on these calls, did anyone talk 0:22:38.400 --> 0:22:41.639 about other banks or there's still concerns that other banks 0:22:41.680 --> 0:22:44.000 may have been following and doing the same exact thing 0:22:44.040 --> 0:22:46.879 that Silicon Valley Bank was doing. Before I get that, 0:22:46.960 --> 0:22:48.480 I want to tell you real quick about our friends 0:22:48.480 --> 0:22:51.400 that gusts of precious medals. You know what's been happening 0:22:51.400 --> 0:22:53.879 in the headlines in the economy, you know what's been 0:22:53.920 --> 0:22:56.480 happening with interest rates, and if you've been saving for 0:22:56.560 --> 0:22:59.359 retirement for a long time, you know how important it 0:22:59.400 --> 0:23:03.439 is to hecked your assets. 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There are 0:24:45.600 --> 0:24:50.400 very few off atty banks though, that are similarly situated 0:24:50.440 --> 0:24:55.920 to Silicon Valley Bank. Number one. It was almost exclusively 0:24:56.119 --> 0:25:02.679 big tech and venture capital companies that were deposits in 0:25:02.800 --> 0:25:05.359 Silicon Valley Bank. And the way Silicon Valley Bank would 0:25:05.359 --> 0:25:10.159 work is they'd they'd bank a big venture capital firm, 0:25:10.840 --> 0:25:14.639 and the VC firm would require that all their portfolio companies. 0:25:14.640 --> 0:25:16.840 So a venture capital firm is a firm that takes 0:25:16.880 --> 0:25:23.320 investments from individuals and institutions and then invest typically in 0:25:23.359 --> 0:25:27.960 the tech space early stage and startup companies, and so 0:25:28.080 --> 0:25:32.719 a VC firm could have dozens or even hundreds of 0:25:33.080 --> 0:25:37.000