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Speaker 1: Breakingpoints dot Com. Good morning, everybody, Happy Monday. We have
Speaker 1: an amazing show of everybody today. What do we have Crystal?
Speaker 1: Indeed we do. Boy oh boy, do we have a
Speaker 1: show for you this bank bailout Monday. We're going to
Speaker 1: go deep on what exactly is going on in our
Speaker 1: financial system, the government's reaction for President Biden is expected
Speaker 1: to speak today. There is a lot to talk about there,
Speaker 1: so we are going to cover that extensively. A couple
Speaker 1: other stories we want to make sure to touch on
Speaker 1: this show to Norfolk Southern an effort by a couple
Speaker 1: of senators by Parson Fashion to try to hold them
Speaker 1: to account, and also some notable comments from former Vice
Speaker 1: President Mike Pence finally kind of saying what he really thinks,
Speaker 1: I guess about Trump, and in the most cringed possible setting.
Speaker 1: So we'll break all of that down for you. But
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Speaker 1: totally not a bailout. Bailout. Let's put this up there
Speaker 1: on the screen. I did that breaking news segment for
Speaker 1: you guys. On Friday, just to get everybody up to
Speaker 1: speed with FDIC and California regulators took over Silicon Viley Bank.
Speaker 1: Lots of speculation all over the weekend, massive calls and
Speaker 1: pressure on the financial system to pursue a bailout of
Speaker 1: depositors and lo and behold. Sunday evening, Secretary Yellen, the
Speaker 1: Chairman of the Federal Reserve, and the head of the
Speaker 1: FDIC come out with this statement. Secretary Yellen has approved
Speaker 1: actions enabling the FDIC to complete its resolution of Silicon
Speaker 1: Valley Bank, Santa Clara, California in a manner that fully
Speaker 1: protects all depositors. Depositors without access to all of their
Speaker 1: money starting on Monday, March thirteenth. No losses associated with
Speaker 1: the resolution of Silicon Valley Bank will be borne by
Speaker 1: the taxpayer. So let's take a step back and just remember.
Speaker 1: So Silicon Valley Bank goes into federal ownership on Friday,
Speaker 1: they completely start to administer the bank. They begin to
Speaker 1: pursue a variety of options. One of them is a
Speaker 1: for sale where another company is going to come in
Speaker 1: and buy Silicon Valley Bank and fulfill the depositors. Apparently
Speaker 1: there were some indications that PNC was attempting to buy
Speaker 1: the bank, but they decided to pull out at the
Speaker 1: last minute. So then what ends up happening is that
Speaker 1: the FDIC, despite the fact that they only ensured deposits
Speaker 1: up to two hundred and fifty thousand dollars, invoke something
Speaker 1: called the systemic risk exception. The systemic risk exception allows
Speaker 1: the FDIC to protect the deposits of all depositors even
Speaker 1: over that of two hundred and fifty thousand, of which
Speaker 1: some at least ninety percent or so of the deposits
Speaker 1: in Silicon Valley Bank were This was the bank, as
Speaker 1: I had mentioned in that segment, that processes at least
Speaker 1: up to fifty percent of the bank accounts, or almost
Speaker 1: all tech startups in the United States. A tremendous amount
Speaker 1: of tech wealth was concentrated. My personal favorite example is
Speaker 1: that Roku, a multi billion dollar company, had a single
Speaker 1: checking account with four hundred and fifty seven million dollars
Speaker 1: in the account, which, let me just say pause on
Speaker 1: that one. That is absolutely morocle. Oh it's nuts. That is,
Speaker 1: I mean that CEO should be fired instantaneously because it
Speaker 1: doesn't take a financial guru to know that you are
Speaker 1: only insured up to two hundred and fifty thousand dollars.
Speaker 1: So they placed a half a billion dollar bet effectively
Speaker 1: on the idea that the government would come in and
Speaker 1: bail them out, would say ultimately worth out. Well, here's
Speaker 1: what's the crazy part of it, which is now basically
Speaker 1: we've set a standard for We'll also talk about the
Speaker 1: other bank that's been put into ownership of federal regulators
Speaker 1: and is going through later on that has more to
Speaker 1: do with crypto. It's an interesting example, but the systemic
Speaker 1: risk option was invoked for that bank as well. Is insane. Oh,
Speaker 1: it's also crazy. And I look, I'm not saying I
Speaker 1: don't feel for people who have their deposits in the bay,
Speaker 1: especially if you've got tech startup and you got to
Speaker 1: make payroll, and I know that it's very, very dicey
Speaker 1: and it's very stressful. So I have total sympathy with
Speaker 1: those folks. But we got to take a step above
Speaker 1: and look at the total financial system. Per David Sirota,
Speaker 1: we have nine trillion dollars in deposits and banks across
Speaker 1: the United States that are over the threshold that are
Speaker 1: completely uninsured. We have now set the precedent that if
Speaker 1: a bank fails, your deposits are totally good to go. Okay,
Speaker 1: I mean, I'm kind of actually okay with that. But
Speaker 1: but and this is the big butt. Then the banks
Speaker 1: the so are getting to use our money, our deposits
Speaker 1: to take loans and to make a lot of profits.
Speaker 1: But then when they fail, the deposits are backed by
Speaker 1: the FEDS. So how does that work? So you either
Speaker 1: have a private bank with the attendant risk of having
Speaker 1: a private bank, or you have a public bank. I'm
Speaker 1: not even necessarily saying I support a public bank, but
Speaker 1: maybe the option or something like that. I don't want
Speaker 1: federal control of all money. But the entire point of
Speaker 1: having a private banking system was the idea that there
Speaker 1: is some attendant risk with the FDIC that's going to
Speaker 1: ensure you up to two hundred and fifty thousand dollars.
Speaker 1: So this has really blown the cap off of the
Speaker 1: idea that this is a private industry really in any way.
Speaker 1: And I don't know why these people are allowed to
Speaker 1: make millions and millions of dollars if their deposits, which
Speaker 1: is the fundamental part of all of their wealth and
Speaker 1: their balance sheet, is going to be totally insured by
Speaker 1: the federal government. That's right. Yeah, then I think that's
Speaker 1: an incredibly key point. Whatever you think about this bailout,
Speaker 1: and don't let anyone gaslight it into thinking that this
Speaker 1: is not a bailout, and not just of SVB, and
Speaker 1: not just of First Republic, which is the other bank
Speaker 1: that failed, but of the entire banking system. So two
Speaker 1: things you need to recognize. Number One, Asaga was just
Speaker 1: laying out, this defacto indicates to every bank in the
Speaker 1: entire country that even though they've only been paying into
Speaker 1: the fdi C to ensure two hundred and fifty thousand
Speaker 1: dollars deposits, de facto they actually have insurance on one
Speaker 1: hundred percent of deposits. Now, the powers that be here,
Speaker 1: our central bankers, are saying, oh, no taxpayer dollars are
Speaker 1: on the line. Okay, maybe not technically for Silicon Valley Bank,
Speaker 1: But who do you think is backstopping that entire insurance
Speaker 1: system when the banks have not been paying in sufficient
Speaker 1: funds to actually ensure the entirety of the deposits. Who
Speaker 1: do you think is on the hook for that? That's
Speaker 1: number one. Number Two, in some way ways, the least
Speaker 1: important thing they did was to backstop these particular deposits,
Speaker 1: because in addition to that, they also announced new lending
Speaker 1: availability for banks across the country. And not only that,
Speaker 1: but the reason that Silicon Valley Bank failed, one of
Speaker 1: the reasons is because they held a lot of their
Speaker 1: assets in long term treasury bonds. As the FED has
Speaker 1: lifted interest rates, that has caused the value of those
Speaker 1: bonds to decline. So they were suffering losses in terms
Speaker 1: of their assets. And we're going to show you in
Speaker 1: a moment how they were sort of an outlier in
Speaker 1: terms of in terms of this particular use of their assets.
Speaker 1: That also they were consolidated in one particular industry, which
Speaker 1: also was very sensitive to FED interest rates. That's the
Speaker 1: reason that this bank ultimately collapsed. Okay, so they had
Speaker 1: to take losses on those assets. The FED is now
Speaker 1: saying that if you hold similar assets that have declined
Speaker 1: in value, they're not going to force you to take losses.
Speaker 1: They're going to pretend that those assets are still valued
Speaker 1: at what you purchase them for. That is effectively a
Speaker 1: gigantic giveaway, not just to SVB, but to the entire
Speaker 1: banking system. And again, the idea that oh, this is
Speaker 1: just taxpayers have nothing to do with this. All of
Speaker 1: this is based on the fact that this is backed
Speaker 1: by the US government, which is backed by the US taxpayer.
Speaker 1: So you have two things that have happened here that
Speaker 1: are incredibly significant in ways that I struggle to completely
Speaker 1: wrap my head around. Number one is, as we said,
Speaker 1: the one hundred percent of deposits now apparently ensured by
Speaker 1: you and me and the federal government. Okay, that's number one.
Speaker 1: Number Two, this idea that these two banks which just
Speaker 1: failed are quote unquote systemically important. This is insane. It's ludicrous,
Speaker 1: especially this cryptobank that just went. This is not a
Speaker 1: large bank. Well, that's what really starts the questioning. Enough,
Speaker 1: any bank that fails is out bailed out. So the
Speaker 1: precedent that is set here is every bank is too
Speaker 1: big to fail. So okay, if that's where we are,
Speaker 1: we need to have an entire rethink of our banking system.
Speaker 1: To your point, Sager, that reflects the fact that ultimately
Speaker 1: the US taxpayer is on the hook for all of
Speaker 1: these banks and for all of these deposits. And you know,
Speaker 1: there's a lot of talk about, okay, is it a
Speaker 1: bail out or not, and these depositors or they didn't
Speaker 1: do anything wrong, they deserve to be bailed out. Okay,
Speaker 1: that's fine. We have definitely bailed out the executives and
Speaker 1: shareholders of every other bank in the country, especially ones
Speaker 1: that had similar risk profiles as what this bank ultimate.
Speaker 1: So let's go even to this even deeper. Let's go
Speaker 1: put this up there on the screen. Our friend Jeff
Speaker 1: Stein asked this to a Treasury official. He says, aren't
Speaker 1: you exposing the US taxpayers not just uninsured deposits that
Speaker 1: need to be guaranteed, but for trillions more throughout the
Speaker 1: banks in the country. Quote. I think we will right
Speaker 1: now focused on addressing the current issue and stabilizing the
Speaker 1: banking system, assuring uninsured depositors that they will be made.
Speaker 1: But I do think we'll be looking back and reassess
Speaker 1: and assess their whether any change should be made. I
Speaker 1: want to emphasize again this is funded by fees on banks.
Speaker 1: But here's the problem with that. There's only one hundred
Speaker 1: and twenty six billion in the FDIC account to quote
Speaker 1: unquote bail out the depositors of all of this. That's
Speaker 1: barely enough to cover the uninsured deposits in Silicon Valley Bank.
Speaker 1: To take it even further, Crystal and why it's a
Speaker 1: de facto tax on all of us. If the banks
Speaker 1: have to start paying more into the FDIC right now,
Speaker 1: that one hundred and twenty six billion, they have to
Speaker 1: get up to nine trillion to eventually ensure all of this.
Speaker 1: You ever heard of a bank that's going to voluntarily
Speaker 1: pay more money. Who's do you think is going to
Speaker 1: be paying those fees? It's customers. We're the ones who's
Speaker 1: you know already bank account bank accounts. They'll charge you
Speaker 1: for it if you have a low enough deposit guarantee you.
Speaker 1: If they have to increase the amount they're paying to
Speaker 1: the FDIC, every single one of us are the ones
Speaker 1: who are going to be paying for it through all
Speaker 1: these bs banking fees increase on annual fees on your
Speaker 1: credit Oh, they're going to charge you for a debit
Speaker 1: card now, Oh you want some checks, that'll be like
Speaker 1: nine hundred dollars, some outrageou stuff. They will never pay
Speaker 1: it voluntarily. There's no possible way that you could ever
Speaker 1: in fact, that Silicon Valley Bank. And this is more
Speaker 1: reporting from lever News, who by the Way has done
Speaker 1: some of the best reporting on all of this, and
Speaker 1: especially as they do following the money in terms of
Speaker 1: corruption in politics. Silicon Valley Bank was lobbying against increasing
Speaker 1: the fees that banks have to pay into the FDIC, saying, oh,
Speaker 1: there's no risk here, there's no problem, very low risk,
Speaker 1: so don't need to worry about it. We saw how
Speaker 1: that ultimately worked out. There's one other thing that I
Speaker 1: really want to bring up here, because I think there
Speaker 1: is a notion out there that if the federal government
Speaker 1: didn't step in that these depositors at Silicon Valley Bank
Speaker 1: would have lost everything. It would have been wiped down,
Speaker 1: everything above two hundred and fifty thousand dollars. But there
Speaker 1: is in fact a process in place that is supposed
Speaker 1: to be followed in such a situation, which is okay,
Speaker 1: first two hundred fifty thousand dollars ensured, no problem, everybody's
Speaker 1: clear on that, and then the rest of the deos
Speaker 1: our backstop by the assets of the bank, So the
Speaker 1: federal government sells off the assets and then makes depositors
Speaker 1: as whole as possible. Based on what we know publicly available,
Speaker 1: that would have caused probably like a ten percent haircut,
Speaker 1: you still would have likely had people getting somewhere around
Speaker 1: ninety percent of their deposits. Now, the argument that was
Speaker 1: made in quite strident terms over the weekend, in particular
Speaker 1: by a lot of people in Silicon Valley who have
Speaker 1: skin in the game, is that you can't just let
Speaker 1: depositors take a haircut. You can't let the normal process
Speaker 1: play out, because there's going to be a bank run.
Speaker 1: It's going to be a catastrophe across the system, and
Speaker 1: so we have to act now to make sure they
Speaker 1: get one hundred percent of their money right away on Monday,
Speaker 1: to forestall that possibility. I think that's possible, But I
Speaker 1: also think that regulators were released swayed by the fact
Speaker 1: that you had a lot of influential people very loudly
Speaker 1: proclaiming in certain terms that there was going to be
Speaker 1: a bank run, and that scared them away from allowing
Speaker 1: the door process to play out and force them to
Speaker 1: levy this absurdity that these were both systemically important banks
Speaker 1: and again effectively codify within the you know, within our
Speaker 1: country that literally every single bank is now considered systemically
Speaker 1: important ie too big defense. So let's put the third
Speaker 1: one up there on the screen. This is an important
Speaker 1: piece by Matt Levine, how the startup bank had a
Speaker 1: startup bank run. One of the problems for Silicon Valley
Speaker 1: Bank is his customers had too much cash and now
Speaker 1: they simply don't. What he's referring to is that startups
Speaker 1: that were cash flush kept their bank accounts very high
Speaker 1: in their balances throughout twenty twenty one. Then throughout twenty
Speaker 1: twenty two, as federal rates began to rise and they
Speaker 1: had to begin pulling cash out to cover a lot
Speaker 1: of expenses. Because they were unable to raise even more money,
Speaker 1: they began to withdraw. Now, as the withdrawals continue, as
Speaker 1: I said, Silicon Valley Bank, or as you laid out,
Speaker 1: Silicon Valley Bank had a lot of treasuries today had
Speaker 1: to sell many of those treasuries at a loss in
Speaker 1: order to cover many of the deposits there were getting done.
Speaker 1: All of this cascades to the point where it's a
Speaker 1: very shaky procedure. Then they have an announce a new
Speaker 1: equity raise in order to try and pump cash into
Speaker 1: the bank. That is what really triggered a lot of
Speaker 1: people to say, oh, clearly, there's some bad stuff going
Speaker 1: on here. And then on top of that, you had
Speaker 1: kind of group chats and other very influential people in
Speaker 1: Silicon Valley getting a hold of this understanding that this
Speaker 1: was going to happen, and within I think about a
Speaker 1: twenty four hour period, almost forty two billion dollars were
Speaker 1: withdrawn from the bank. That enough was just able to
Speaker 1: completely collapse it because they didn't have the attendant cash
Speaker 1: that was available to them. Let's go ahead and put
Speaker 1: the next one up there. Friend Kevin Russ actually did
Speaker 1: a good write up here in the New York Times,
Speaker 1: and really what he talks about is that this is
Speaker 1: the first online bank run in that the rumors around
Speaker 1: the insolvency of Silicon Valley Bank spread so quickly. It's
Speaker 1: part of the reason why you had that forty two
Speaker 1: billion dollars within a single day that was withdrawn and
Speaker 1: why the FEDS had to step in so quickly and
Speaker 1: not even be able to broker some sort of deal.
Speaker 1: So this was a bank just so deeply entrenched in
Speaker 1: Silicon Valley it's almost difficult to comprehend. I mean, they
Speaker 1: had all sorts of complex financial instruments that don't make
Speaker 1: sense for any other bank except for one that focuses
Speaker 1: on tech, and that's great in the boom times, it's
Speaker 1: bad in the bad times. And what have we learned
Speaker 1: right now? We just actually had hot jobs numbers. But
Speaker 1: tech is disproportionately having a lot of problems, especially with
Speaker 1: the demise of cheap money. And I think that the
Speaker 1: concentration of so many cozy banking relationships, with Roku being
Speaker 1: a good example, having some checking account with four hundred
Speaker 1: and fifty million dollars, he may not even have the
Speaker 1: most amount in the checking There might be people in
Speaker 1: there with like a billion dollar balance, which is nuts.
Speaker 1: I mean, anybody who has anything to do with this
Speaker 1: business would tell you that that's outrageous. Part of the
Speaker 1: reason why, though, is that Silicon Valley Bank had such
Speaker 1: a long relationship with many of these people that they
Speaker 1: felt a deep amount of loyalty and in some cases
Speaker 1: were signing them into exclusive lock ups where if they
Speaker 1: got venture debt through Silicon Valley Bank, they had to
Speaker 1: keep their checking account there, they had to do their
Speaker 1: mortgage there. There was it's basically like a vertically integrated
Speaker 1: tech bank, which again disproportionately exposes it. And you know,
Speaker 1: whenever you look at their balance sheet. Let's go to
Speaker 1: a four here, please. This is a really interesting one
Speaker 1: that was actually put together by some financial analysts. You
Speaker 1: can just see clearly the higher risk deposit base. Those
Speaker 1: who are just watching the US Bank to loan, the
Speaker 1: US Bank loan to deposit ratio, those who are looking
Speaker 1: in the top right, look at every single other bank,
Speaker 1: and then look at Silicon Valley Bank, well over the
Speaker 1: one hundred percent mark, right in the higher risk deposit
Speaker 1: base zone for nearly one hundred and ten percent of
Speaker 1: their loan to deposit ratio. So already they had a
Speaker 1: very high loan to deposit ratio. And then at the
Speaker 1: same time, whenever you look at Silicon Valley Bank, they
Speaker 1: had a very high impact of unrealized security losses on
Speaker 1: their capital ratios because so much of their assets were
Speaker 1: held in private markets where you had just a decimation
Speaker 1: of values. So there's a lot, a lot going on, Yeah,
Speaker 1: a lot. That just shows you that, as you said, already,
Speaker 1: we showed you they have a high loan to deposit ratio.
Speaker 1: Their treasuries. I think in terms of their assets they
Speaker 1: had seventeen percent more in treasuries than any other bank
Speaker 1: in the United States. So already. Basically you just have
Speaker 1: bad executives that are at the top. You know. Actually,
Speaker 1: some people who work at Silicon Valley Bank spoke to
Speaker 1: some people around them, and many of them were outraged
Speaker 1: at leadership who really didn't tell them what was going on.
Speaker 1: They announced that raise, which effectively collapsed it. They had
Speaker 1: no idea. Now they're possibly out of a job. So
Speaker 1: there are people at the bank itself who are really
Speaker 1: upset senior management. The FDIC says they're gone, but look,
Speaker 1: really the question is is like, are these people going
Speaker 1: to making money because they say the taxpayers will bear
Speaker 1: none of the losses. I don't want to see a
Speaker 1: single one of these people who is getting the bonuses
Speaker 1: that AIG got in the middle of their bailout, and
Speaker 1: there's no guarantee on that right now. Zero. Well, and
Speaker 1: we'll show you the numbers on this, but a bunch
Speaker 1: of management were cashing out and selling their stock in
Speaker 1: recent weeks. Oh and by the way, they announced bonuses
Speaker 1: literally on the day that the government took over the
Speaker 1: bank as well for their employees and executives, So you
Speaker 1: know they they're going to be okay, I think is
Speaker 1: the bottom line here, Even though they're the party line
Speaker 1: from the government is that they quote unquote wiped down.
Speaker 1: And again, really important to keep in mind, we're not
Speaker 1: just talking about backstopping the depositors of these two banks here,
Speaker 1: that's one thing. We're also talking about a whole new
Speaker 1: federal reserve lending facility using basically souped up and fake
Speaker 1: asset prices as collateral allowing this. So this is a
Speaker 1: massive injection into the economy that has huge ramifications and also,
Speaker 1: by the way, stage sort of stands directly at odds
Speaker 1: with the direction of monetary policy tightening that the FED
Speaker 1: has been engaged in. And that's a whole other piece
Speaker 1: that we could get into. But you know, the expectation
Speaker 1: was that the FED was going to hike rates another
Speaker 1: zo point five percent, so that's a very significant raise. Well,
Speaker 1: now you're going in the opposite direction, injecting funds into
Speaker 1: the economy and you know, rescuing these particular workers who
Speaker 1: involved with these particular bank while your overall policy has
Speaker 1: been crushing workers and trying to trigger recession in terms
Speaker 1: of the labor market. So they also had their hand
Speaker 1: forced and are now directly at odds with themselves in
Speaker 1: terms of the direction of policy. There's one other you know,
Speaker 1: there's there's a lot more we could say about this,
Speaker 1: but I also think it's really important to point to
Speaker 1: the fact that, you know, this is a striking example
Speaker 1: of how the tech economy is in a wildly different
Speaker 1: place than a lot of the rest of the economy
Speaker 1: in the job market. That's number one and number two,
Speaker 1: it's always incredible when there's a crisis that impacts wealthy
Speaker 1: and influential people, somehow they always have the mechanisms in
Speaker 1: place to quickly act. They don't have to wait and
Speaker 1: beg the parliamentarian or kiss Joe Mansions toes or whatever.
Speaker 1: They don't have to do anything. They just have They
Speaker 1: figure it out, They figure out the facilities, They make
Speaker 1: up bullshit rationalizations like oh they were systemically important, okay, whatever,
Speaker 1: and somehow they're able to come through with all the
Speaker 1: cash in the world that they possibly need to backstop
Speaker 1: the system. When it's wealthy and influential people whose lives
Speaker 1: and money are at stake, I think it's important to
Speaker 1: note that effectively, you know, I saw tweet this morning.
Speaker 1: It's like democracy at this point basically means rule by
Speaker 1: judges and central bankers. And I think that's really you know,
Speaker 1: it's really quite apparent. So we've set up a system
Speaker 1: that reacts incredibly quickly and incredibly effectively when it is
Speaker 1: the wealthy whose interests are at stake. For everybody else,
Speaker 1: you got to haggle, you got to go through Congress,
Speaker 1: and ultimately nothing ever happens. Right, And so let's go
Speaker 1: to the second part here. It literally only took an
Speaker 1: hour for all of the leading people in the US
Speaker 1: policymakers to just start or influential economic thinkers start calling
Speaker 1: for Baila, let's put this up there on the screen.
Speaker 1: This was less than an hour after SVB failure. Larry
Speaker 1: Sommers calls for all depositors at Silicon Valley Bank to
Speaker 1: get bailed out one hundred percent. It's just it's like
Speaker 1: you can't even make it up. Immediately after, let's go
Speaker 1: and put this up there, he said, this now is
Speaker 1: not the time for about moral hazard, right, Okay, which
Speaker 1: is our right. I mean, now, in fact, is the
Speaker 1: time for a discussion about moral hazard, because you've just
Speaker 1: told banks that their deposits are covered by insurance they
Speaker 1: didn't pay for, and that their risky behavior is going
Speaker 1: to be always and forever backed up by the FED.
Speaker 1: So I think this is actually a really critical time
Speaker 1: for a conversation about moral Hazzard absolutely and Mitt Romney,
Speaker 1: the famous let Detroit Go Bankrupt doesn't have the same
Speaker 1: theory for Silicon Valley. He says, Silicon Valley bank shareholders
Speaker 1: and executives lose it all as they should depositors in
Speaker 1: good faith. However, should recover have access to depositor to
Speaker 1: meet their payrolls, pay their suppliers and to prevent contagion. Again,
Speaker 1: you can sympathize with that, and I absolutely do, but
Speaker 1: then you have to have the correct mechanisms in place
Speaker 1: to make sure that all of us are not going
Speaker 1: to be paying more of these bank fees and that
Speaker 1: the government and the taxpayers are not the ones who're
Speaker 1: actually backstopping the entire financial system when their sound business
Speaker 1: practice is supposed to be the check on it. And then, personally,
Speaker 1: my favorite producer Griffin found this one. Put this up
Speaker 1: there on the screen from Ryan Mawi works in climate
Speaker 1: He says, with the implosion of SBB, the planet could
Speaker 1: literally be at stake. Fifteen hundred companies in climate tech
Speaker 1: were venture backed at the bank and he goes on
Speaker 1: to make a case that if we don't bail out
Speaker 1: the bank, that we're actually going to destroy and hurt
Speaker 1: the Silicon Valley, We're going to destroy and hurt the
Speaker 1: planet because those climate tech companies are so vitally important.
Speaker 1: And then finally Mark Cuban go ahead and put this
Speaker 1: up there. He called on the Fed to actually step
Speaker 1: in and buy the bank debt to end the run.
Speaker 1: So all of these people who have, as you said,
Speaker 1: skin in the game. By the way, Bill Ackman was
Speaker 1: also the billionaire investor, was also immediately calling for quote
Speaker 1: a highly deludedive government bailout of Silicon Valley Bank, all
Speaker 1: making the case in terms of contagion that's happening across
Speaker 1: the economy. But you know, first of all, it's I'm
Speaker 1: curious still about whether the contagion actually was real by
Speaker 1: many respects. If you think about it this way, there
Speaker 1: has been all these tech layoffs, right, it has an
Speaker 1: impacted the jobs number of the economy literally at all.
Speaker 1: Like if you think about like the Google layoffs in totality,
Speaker 1: they don't even equal like a factory in Alabama if
Speaker 1: one of those were to go out of business. So
Speaker 1: tech is one of those like high cash producing industries
Speaker 1: very important to GDP as a whole, but in terms
Speaker 1: of workforce it is not even close. In terms of
Speaker 1: punching it that way, Treasury indicated that there were several
Speaker 1: other banks was their work that had a similar risk profile.
Speaker 1: But you know, we showed you some charts that indicated
Speaker 1: SVB was actually quite an outlier here. Now we did
Speaker 1: have prior to SVB collapsing, we also had silver Gate,
Speaker 1: which is a small crypto focus bank that collapsed. Then
Speaker 1: you have SVB, then you have this other small ish
Speaker 1: crypto related bank that also collapsed. So you can see
Speaker 1: it's very concentrated. We should have learned, they should have
Speaker 1: learned decades ago that having your eggs in one basket
Speaker 1: industry wise is very risky business practice to start with.
Speaker 1: And then they also in the case of SVB, really
Speaker 1: upped the ante in terms of their interest rate risk
Speaker 1: by putting their assets also in these long term treasury bunds.
Speaker 1: But I am skeptical of the case that was being
Speaker 1: made in again very loud and over the top terms
Speaker 1: by a lot of influential people on social media, some
Speaker 1: of whom we just showed you, like Mark Cuban and
Speaker 1: others that there would one hundred percent be a bank
Speaker 1: run on Monday if we did not act, because again
Speaker 1: a lot of the commentary ignored the fact that there
Speaker 1: is a process in place, There is an existing process
Speaker 1: for dealing with banks when they are in solvement insolvent,
Speaker 1: and it does not lead to depositors losing all of
Speaker 1: their cash over two hundred and fifty thousand dollars. They
Speaker 1: likely would have taken perhaps about a ten percent haircut.
Speaker 1: So in order to you know, one hundred percent backs
Speaker 1: up these depositors, they have effectively, they have effectively deemed
Speaker 1: every single bank in the country too big to fail,
Speaker 1: which is a gigantic shift. Well, I don't know if
Speaker 1: it's a shift in policy, but it's a recognition that
Speaker 1: that's the reality of our banking system and that requires
Speaker 1: a dramatic overhaul of the way we're approaching this. One
Speaker 1: other thing in terms of like the climate tech piece,
Speaker 1: which again goes back to the fact, you know, he's
Speaker 1: acting like, oh, all of these what one hundred percent fail?
Speaker 1: That is alarmist and it is just false. In addition,
Speaker 1: there are few people, a few banking clienteles in the
Speaker 1: world that would be as well positioned to withstand having
Speaker 1: a cash crunch for a show time period than these individuals,
Speaker 1: many of them who were backed by wealthy venture capitalists,
Speaker 1: who were some of the same voices who were demanding
Speaker 1: the bail out over the weekend, Well, if they felt
Speaker 1: these companies were so promising, so important, etc. I didn't
Speaker 1: see them marshaling their wealthy resources in order to provide
Speaker 1: bridge loans and backstop the losses and make sure that
Speaker 1: these employees weren't hurt. Seemed to be a lot fewer
Speaker 1: Libertarians in Silicon Valley than there were just maybe two
Speaker 1: weeks ago. So they weren't, you know, bootstrapping and coming
Speaker 1: together to make sure that this industry and their companies
Speaker 1: that they've invested in make it through this time. Instead,
Speaker 1: they just started screaming and demanding that the government, which
Speaker 1: again they're saying no taxpayer dollars. But I think we've
Speaker 1: explained the way that ultimately we're all on the hook
Speaker 1: for this, but demanding that the government come to their
Speaker 1: rescue in this instance, yes, exactly right. And finally, let's
Speaker 1: go to the let's go to the really good part here,
Speaker 1: which I really enjoy, which is on top of all
Speaker 1: of this, and this shows you why the systemic risk
Speaker 1: thing being invoked here is now the precedent for all time.
Speaker 1: A bank you probably have never even heard of. Let's
Speaker 1: put it up there on the screen. The crypto friendly
Speaker 1: signature bank has now been shut down by regulators that
Speaker 1: was announced on Sunday in the systemic risk exception, which
Speaker 1: is also going to make all of their depositors completely
Speaker 1: hole by the Treasury Department. Well, this is a perfect
Speaker 1: example of a bank where you had a cozy relationship
Speaker 1: with regulators and with former Congressman, one of them being
Speaker 1: throw this up there, mister Barney Frank, the classic Dodd
Speaker 1: Frank Bill author himself, the chairman of the House Financial
Speaker 1: Services Committee, the so called hero of the people, getting
Speaker 1: paid some one million dollars to sit on the bank.
Speaker 1: And then when you consider also what this bank was
Speaker 1: doing and how exactly facilitated this loss is crystal. Let's
Speaker 1: go ahead and put this up there. Signature Bank being
Speaker 1: closed by New York state authorities and also invoking the
Speaker 1: systemic risk except and is having the FEDS come in
Speaker 1: and backstop them, largely because large again, largely because this
Speaker 1: bank was widely exposed to many of the losses in
Speaker 1: the crypto industry, and much of their assets and balance
Speaker 1: sheet in terms of their deposits, they were unable to
Speaker 1: fulfill them because of such a wide loss. This wasn't
Speaker 1: even the Treasury Department. This was a large bank that
Speaker 1: was basically all in on the crypto industry and then
Speaker 1: got itself to the point where its assets were almost
Speaker 1: completely and totally wiped out, and with that wipeout, unable
Speaker 1: to fill their deposits, and the FEDS step in and
Speaker 1: basically make all of their depositors whole. And this is
Speaker 1: total malfeasance on the behalf of the signal. Alleged malfeasance
Speaker 1: by the way, for the lawyers who are out there.
Speaker 1: But at the very least, let's call it what mismanagement.
Speaker 1: Let's call it mismanagement to go all in and backstop
Speaker 1: the crypto industry, make yourself so holy and totally exposed,
Speaker 1: unable to fulfill your deposits, and then, because you know
Speaker 1: what's the old what's like, you privatize the gain, socialize
Speaker 1: the risks. Now the FDI see is the one who's
Speaker 1: paying all these people's deposits. I saw somebody who was
Speaker 1: like libertarian on the way up, socialist on the way down.
Speaker 1: It's like, wow, that is really well said. Well, and
Speaker 1: it's incredible with Barney Frank. Okay, so he's famously the
Speaker 1: author of Dodd Frank financial Reform, which in my opinion,
Speaker 1: was an improvement, did not go far enough. But okay,
Speaker 1: then he immediately leaves Congress cashes in in variety of ways,
Speaker 1: one of which is serving on the board of this bank,
Speaker 1: Signature Bank, which has now gone belly up. And in
Speaker 1: his position now as a board member of this bank,
Speaker 1: he actually went and lobbied for them to roll back
Speaker 1: some of the very regulations that he helped you auther
Speaker 1: and put in place. So it's just could not find
Speaker 1: a more perfect example of the disgusting nature of the
Speaker 1: American political system ultimately, and the idea that listen, maybe
Speaker 1: maybe you could have a big leaf of truth to
Speaker 1: the idea that SVB was systemically important. I think that's absurd,
Speaker 1: but okay, maybe you could make that case with regional banks,
Speaker 1: especially in the state of California. But there's no making
Speaker 1: that case on this on this one, absolutely not. And
Speaker 1: so even a Silicon Valley bank is getting all the
Speaker 1: headlines about their depositors being backstopped. The very same provisions
Speaker 1: apply to Signature Bank as well, under this same guys
Speaker 1: and fake nonsense that they're systemically important. And that's why
Speaker 1: it's so important to understand what this means, not just
Speaker 1: for this moment, but going forward. The US government has
Speaker 1: said we are backstopping one hundred percent of deposits at
Speaker 1: these banks and effectively, de facto, as Jeff Stein pointed out,
Speaker 1: at all others. And if we are deeming Signature Bank
Speaker 1: too big to fail, every bank in the country is
Speaker 1: effectively too big to fail. We have got to think
Speaker 1: about what this means or our entire banking system. And
Speaker 1: the direction like this direction as exists right now is
Speaker 1: completely insane. That the public is on the hook for
Speaker 1: literally everything, and then the gains are all concentrated in
Speaker 1: the handful of a few wealthy executives in shaffold profits
Speaker 1: and of bonuses. That's where all of this is going
Speaker 1: to lie. Why don't we go and tell the people
Speaker 1: about the bonuses. Yeah, so let's take a look at
Speaker 1: this gun. Put this up on the screen. So we
Speaker 1: have this idea that oh, they you know, they didn't
Speaker 1: They're not able to cash in the shareholders and executives
Speaker 1: are completely wiped down. Okay, well, well, well before the collapse,
Speaker 1: it turns out executives were selling shares and at quite
Speaker 1: a rapid clip. Here this is from Unusual Wales. It's
Speaker 1: actually in response to that Mitt Romney tweet that we
Speaker 1: put up before, and they submit this may interest you.
Speaker 1: Before the collapse, executives sold shares. Gregory Becker, the CEO,
Speaker 1: sold eleven percent of his shares on February twenty seventh.
Speaker 1: Michael Zucker, who was their general count, sold nineteen percent,
Speaker 1: Daniel Beck the CFO, thirty two percent, Michelle Draper the
Speaker 1: CMO twenty five percent. So when you hear people saying,
Speaker 1: well they got the executive's management got completely wiped down, Well,
Speaker 1: they took their gains and lock them in before the
Speaker 1: thing collapsed, so they're going to be just fine. Not
Speaker 1: only that, put this next piece up on the screen
Speaker 1: from CNBC. Silicon Valley Bank employees received bonuses literally hours
Speaker 1: before the government takeover. Now I've seen a lot of
Speaker 1: people say, oh wow, this was for work that they
Speaker 1: did in twenty twenty two, et cetera. Okay, come on,
Speaker 1: hours before the government takes over, you're doling out cash bonuses,
Speaker 1: which again could be going to those depositors to help
Speaker 1: make them whole. No, okay, got one more for you though,
Speaker 1: And we had David Serota do a piece on this
Speaker 1: over the weekend because I thought it was so important.
Speaker 1: But I want to make sure that we highlight this
Speaker 1: for you as well, because this is a key a
Speaker 1: part of the story as anything else. Put this up
Speaker 1: on the screen. Silicon Valley Bank, their chief, actually pressed
Speaker 1: lawmakers to weaken bank risk regulations. This was under the
Speaker 1: Trump administration. You had I think every Republican and something
Speaker 1: like sixty or seventeen Democrats, twelve sixty, I've got the
Speaker 1: numbers here, let me see vote for this as well.
Speaker 1: But effectively, the head of Silicon Valley Bank, one of
Speaker 1: the guys who just cashed in on his shares before
Speaker 1: the bank collapsed, he went and pushed legislators to exempt
Speaker 1: more banks, including his own, from new regulations that were
Speaker 1: passed under Dodd Frank in reaction to the two thousand
Speaker 1: and eight financial crisis. And by the way, it was successful.
Speaker 1: So the fact that they got these regulations loosened meant
Speaker 1: that they were not subject to the same level of
Speaker 1: stress tests that they would have been otherwise. He argued
Speaker 1: that svb's deep understanding of the markets that they serve
Speaker 1: and the strong risk management practices would lead to them
Speaker 1: being just fine. They said, without changing the regulations, SVB
Speaker 1: would need to divert significant resources providing financing to job
Speaker 1: creating companies and innovation economy to complying with enhanced prudential
Speaker 1: standards and other requirements. Quote. Given the low risk profile
Speaker 1: of our activities and business model, such a result would
Speaker 1: stifer stifle our ability to provide credit to our clients
Speaker 1: without any meaningful corresponding reduction in risk. So he argued,
Speaker 1: we're totally risk free. We've got deep knowledge of this industry.
Speaker 1: We're good to go. We don't need all these stress tests.
Speaker 1: It was successful supported here with fifty Republicans and seventeen Democrats,
Speaker 1: and they faced because of that, fewer stress tests and
Speaker 1: other regulations than they otherwise would have been required to face. Yeah,
Speaker 1: so they weren't even on the Trouble bank list. So
Speaker 1: the FDIC didn't have full visibility into their books. Not
Speaker 1: only that, but the SVB CEO was actually on the
Speaker 1: board of the Federal Reserve Bank of San Francis. He
Speaker 1: had to resign after the immediate collapse of his own bank.
Speaker 1: This was a deeply connected person. I'm rereading the Too
Speaker 1: Big to Fail book right now by Andrew Ross Sorkin,
Speaker 1: written I think it was written in two thousand and nine,
Speaker 1: just a recap of everything that happened in two thousand
Speaker 1: and eight. And it's like in all rhymes, it's all
Speaker 1: the same, Like, all these guys were deeply interconnected. They
Speaker 1: had the cell phones of Hank Paulson and of Tim Geithner,
Speaker 1: and the financial system stepped in immediately to broker deals
Speaker 1: to save them. In their view they were saving the economy,
Speaker 1: and many people's view they were saving themselves and saving
Speaker 1: their bonuses and four to one gays. But here's the thing, Like,
Speaker 1: at the end of the day, the idea that these
Speaker 1: people were able to dole out and in some cases
Speaker 1: we're talking here about one hundred and forty thousand dollars
Speaker 1: in bonuses per employee, some twenty thousand dollars bonuses for
Speaker 1: lower level. Who knows what the management was given. Now
Speaker 1: was it given in cash or in stock? If it
Speaker 1: was given in cash, every single one of those things
Speaker 1: needs to get paid back. Sorry, I mean it's impossible.
Speaker 1: The idea that you can just be doling out cash
Speaker 1: at the end. That's like the story of Bernie Madoff,
Speaker 1: who was giving out hundred million dollar bonuses on the
Speaker 1: very last day before he was about to turn himself
Speaker 1: into the fence because he wanted to make sure he
Speaker 1: could dispel all this cash before he was going to
Speaker 1: go into jail. All of their behavior lines up. You're
Speaker 1: really going to tell me the twenty twenty two bonus
Speaker 1: had to be processed on the very day of the failure.
Speaker 1: You're really going to sit here and say that you
Speaker 1: didn't know that the bank was in serious trouble when
Speaker 1: you were selling up to thirty two percent of all
Speaker 1: your stockholdings in the company, because that's the vast majority
Speaker 1: of your comp that's harder in cash which was pocketed
Speaker 1: from investors into your pocket, of which you then are
Speaker 1: now saying, oh woe is me? Was I had no
Speaker 1: idea that it was all coming. This is corruption, pure
Speaker 1: and simple. The FDIC example you gave is a good one,
Speaker 1: and I just think you know also in the future,
Speaker 1: this is going to be the main fight. Sure the
Speaker 1: FDIC rate can go up for the banks. I don't
Speaker 1: even think that's a bad thing, but they cannot raise
Speaker 1: rates on the rest of us. And also, if you
Speaker 1: think about it, with a liquidity crunch, now that is
Speaker 1: happening here. We've got a debt ceiling crisis which is looming.
Speaker 1: Our economy is in serious trouble right now in terms
Speaker 1: of getting probably closer to a debt ceiling crunch, just
Speaker 1: because of how much money this might say if taxpayer
Speaker 1: dollars do go on the hook. And second, I mean
Speaker 1: the procarity right now with the financial system already, with
Speaker 1: the lead up to this debt crisis, this has put
Speaker 1: us in a much worse spot. There was a lot
Speaker 1: of theorizing that I saw on Twitter that oh, this
Speaker 1: all just became political because of the name of the
Speaker 1: bank in Silicon Valley has become this kind of like
Speaker 1: boogeyman whatever. If this had been called Farmer's Bank, it
Speaker 1: would have been no problem. I think it is the
Speaker 1: polar opposite, the fact that you had so many wealthy
Speaker 1: and well connected individuals tied into both parties, tied into
Speaker 1: deeply into the financial banking system. Some of the most
Speaker 1: powerful people in the country and really in the world,
Speaker 1: that led them to react way faster, and it allowed
Speaker 1: them to be persuaded that, oh, they have to do
Speaker 1: this and they have to backstop the entire system or
Speaker 1: else there's going to be complete calamity. I have not
Speaker 1: been persuaded of that case. And this is also the
Speaker 1: siren song that they always sing, that oh, we have
Speaker 1: to do the bailounce because there's no other choice otherwise
Speaker 1: there's going to be complete economic calamity. So I'm a
Speaker 1: little bit skeptical of that case being made, given that
Speaker 1: we have seen it before in the past to people's
Speaker 1: individual and personal benefit. Yeah, I think you are exactly correct.
Speaker 1: All right. We have a great journalist to break down
Speaker 1: what he thinks of exactly what the federal government is
Speaker 1: doing and explain it in playing terms. And also he
Speaker 1: has a great piece, as Matthew Zeitlin, that we're going
Speaker 1: to bring in with grid News. It's a great piece
Speaker 1: explaining how exactly we got here, what the promise of
Speaker 1: Dodd Frank financial reform was, and how it is that
Speaker 1: now we're what fifteen years down the road, and we're
Speaker 1: doing a bailounce once again. So how did that ultimately fail?
Speaker 1: So let's get to it. Matthew Ziland, thanks for joining us.
Speaker 1: Good see man, thanks for having me. Good morning. Yeah.
Speaker 1: Of course, so we did our best to explain what
Speaker 1: action the US government is taking, but I would love
Speaker 1: for you to just explain in the plain as terms
Speaker 1: possible what has just been decided. Yeah. So there's two
Speaker 1: parts of this. The first is that any deposit holder
Speaker 1: in Signature Bank or Silicon Valley Bank as of this morning,
Speaker 1: has full access to any amount of money they deposited
Speaker 1: in those two institutions, even if it's above two hundred
Speaker 1: and fifty thousand dollars, which is the FDIC insurance limit.
Speaker 1: There is like a lot of doubt about this over
Speaker 1: the weekend, but that is now totally. It's like those
Speaker 1: money claims are good. You have access to any money
Speaker 1: over two and fifty thousand dollars. The second thing is
Speaker 1: arguably more expansive, but a little harder to understand. Any
Speaker 1: bank now can go to the FED and host assets
Speaker 1: they have, you know, Treasury bonds and agency mortgage backed
Speaker 1: securities and get money back. It's a lending operation. It's
Speaker 1: essentially a way to take their current long term assets
Speaker 1: and over temporarily for a year or so, turn them
Speaker 1: into cash. The idea here is that if any bank
Speaker 1: is coming under pressure from depositors asking for withdrawals, they
Speaker 1: can have more liquidity, which means that they have more
Speaker 1: cash at hand to process of the withdrawals. But obviously
Speaker 1: the idea here is to make it seem like banks
Speaker 1: that are solvent today will still be solved tomorrow, and
Speaker 1: that if you're a depositor, you don't have to get
Speaker 1: panicky like what happened with Silicon Valley Bank last week. Right,
Speaker 1: And so, Matthew, one of the things we've been talking
Speaker 1: about is that this sets a tremendous precedent now for
Speaker 1: basically all banks in the United States. They now effectively
Speaker 1: the US government is guaranteeing the deposits of all nine
Speaker 1: trillion dollars in banks across the US. What does that
Speaker 1: mean for the banking system as a whole? What are
Speaker 1: the perverse incentives? The moral hazard if you wish so
Speaker 1: this The main thing this does is that any role
Speaker 1: that depositors have in ensuring bank safety and soundness and
Speaker 1: security has been wiped out pretty much. What the government
Speaker 1: here is saying is that all depositors are like they
Speaker 1: have insured deposits, even though the system is only only
Speaker 1: funds itself for insurance these premium claims that banks have
Speaker 1: to pay the FDIC for deposits up to two hundred
Speaker 1: fifty thousand dollars. So that's like a really big deal.
Speaker 1: And the second thing is that the government is essentially
Speaker 1: saying that if you're solvent today, like you're going to
Speaker 1: be solvent tomorrow. And that's a even though the federal
Speaker 1: government won't be necessarily quote unquote like spending money on
Speaker 1: these lending operations, in all likelihood, it is like a
Speaker 1: massive subsidy to the kind of regional banking sector. So
Speaker 1: it is a big deal because the banks have not
Speaker 1: had to give anything up in exchange for this. There's
Speaker 1: no added regulation or anything like that. I mean, typically
Speaker 1: that's the deal. It's like, if you want to offer
Speaker 1: FDIC insured deposits, you get overseen supervised by the FDIC,
Speaker 1: and like that level of protection has like really gone up,
Speaker 1: but the kind of the obligations that banks have to
Speaker 1: the system as a whole has not gone up in turn. Yeah,
Speaker 1: talk about that piece a little bit more. Let's go
Speaker 1: ahead and put this tweet that Matthew had up on
Speaker 1: the screen, because as you were pointing to. They have
Speaker 1: paid into the FDIC to this insurance fund with funds
Speaker 1: sufficient to ensure two hundred and fifty thousand dollars first
Speaker 1: two hundred and fifty thousand dollars of their deposits. But
Speaker 1: they actually when the FDICE right here hiked its assessment
Speaker 1: rate for the Deposit Insurance Fund last year, bank trade
Speaker 1: groups opposed it, saying that it was quote a preemptive
Speaker 1: strike against a non existent threat. Clearly they were incorrect
Speaker 1: about that. Now my understanding is the FDIC went ahead
Speaker 1: and hiked its assessment rate anyway. However, it's nowhere near
Speaker 1: sufficient what they've been paying in in order to backstep
Speaker 1: all of the uninsured deposits across the country. So I
Speaker 1: know that the government is going in great lengths. Is
Speaker 1: how the taxpayer's funds aren't on the hook? Like this
Speaker 1: is completely funded by Wall Street payments, et cetera. But
Speaker 1: if we're to facto backstopping the entirety of the banking
Speaker 1: system and all the deposit is held therein, doesn't it
Speaker 1: you know, sort of begger belief to imagine that taxpayer
Speaker 1: funds are not at least sort of on the hook,
Speaker 1: even if they may not be directly spent in any way. Yeah,
Speaker 1: I mean I think sometimes just like looking at kind
Speaker 1: of the flow of funds from you know, the treasury
Speaker 1: to the banks doesn't really capture the value of what's
Speaker 1: been transacted here. I mean, like, this is obviously very
Speaker 1: very valuable to banks and bank depositors, even if literally
Speaker 1: no money is actually spent, Like the deposit fund could
Speaker 1: be stay at one hundred and twenty five billion dollars,
Speaker 1: and yet they're a huge amount of value has been
Speaker 1: given over to depositors. You have to remember our lenders
Speaker 1: to banks and then the banks themselves, which are now
Speaker 1: in a kind of more secure situation. So I think
Speaker 1: what's happening here is that after two thousand and eight,
Speaker 1: there was a huge political backlash to bailouts, and the
Speaker 1: way that was captured in the post two thousand and
Speaker 1: eight laws and in what regulators want to do is
Speaker 1: that they never wanted be in a sit situation where
Speaker 1: they're seen as be giving taxpayer money directly to insolvent
Speaker 1: institutions or lending huge lending facilities to insolvent institutions. So
Speaker 1: what I think we saw Sunday night was a two
Speaker 1: thousand and eight style action, but kind of drawn within
Speaker 1: the lines of what regulators interpreted made the public angry about,
Speaker 1: you know, things like TAR and support for AIG and
Speaker 1: support for things like City Group and stuff where they
Speaker 1: felt like they're rescuing failed or failing institutions, and the
Speaker 1: management wasn't treated harshly enough. Shareholders still survive. So if
Speaker 1: you look at it from kind of the government perspective,
Speaker 1: what they're saying is, look, the SVB shareholders went to zero,
Speaker 1: their management has gotten fired. The tax payer's not really
Speaker 1: the taxpayer money on the line because it's raised from
Speaker 1: the banks, but you know a huge amount of value
Speaker 1: has been transferred to the entire banking sector from ultimately
Speaker 1: the public, even if it's not so much public money,
Speaker 1: but it's kind of like public authority that comes from
Speaker 1: all of us to them. So yeah, it's like this,
Speaker 1: whether or not it's a bailout, it's kind of a
Speaker 1: semantic issue, but it's like a huge amount of support. Right,
Speaker 1: it's obviously a bailout. Andrew Ross bailout, right, So let's
Speaker 1: go ahead and put this up there on the screen.
Speaker 1: You wrote a good piece how two thousand and eight
Speaker 1: reforms did and didn't prepare us for the Silicon Valley
Speaker 1: Bank collapse? Can you just roll through that? I think
Speaker 1: a lot of us, I especially, did have questions. I
Speaker 1: was like, hey, when I'm breaking new segment here, I said,
Speaker 1: this is going to be a big test for Dodd
Speaker 1: Frank as I understand it. They weren't even on the
Speaker 1: troubled bank list. So how did regulators miss this? How
Speaker 1: did the Dodd Frank architecture respond? Yeah, so this is
Speaker 1: really important. Almost as soon as Dodd Frank was passed
Speaker 1: in twenty ten and kind of the rules were written
Speaker 1: over the next few years, banks of around Silicon Valley
Speaker 1: Bank size, So these be like large regional banks that
Speaker 1: are still substantially smaller than JP Morgan's of the world.
Speaker 1: These are banks around fifty billion to two hundred fifty
Speaker 1: billion dollars in assets, and at the time Silicon Valley
Speaker 1: Bank had forty billion, and now they had last week
Speaker 1: over two hundred billion. But they were arguing, is that
Speaker 1: all these rules that were implemented on the largest banks
Speaker 1: to make them kind of more resilient to crisis and
Speaker 1: then make it so that if they failed, they had
Speaker 1: this kind of special process such that the entire system
Speaker 1: wouldn't collapse around them. Those rules were being applied to
Speaker 1: this size of bank, and they were very, very angry
Speaker 1: about it. And the argument they were making is that
Speaker 1: they were lower risk institutions and you're too big to
Speaker 1: fail banks, and two that they could be resolved through
Speaker 1: the normal FDIC process. I mean, the CEO of Silicon
Speaker 1: Valley Bank, when the bank was one fifth the size
Speaker 1: as it was last week, was saying, was testifying to
Speaker 1: Congress to this effect. Regional banks are quite powerful because
Speaker 1: they're kind of locally rooted, and so legislators really listened
Speaker 1: to them anyway. So in twenty eighteen, the Trump administration,
Speaker 1: with a support of a smattering of moderate Democrats, passes
Speaker 1: this rollback partial rollback of dot frank where it's really
Speaker 1: aimed at kind of the Silicon Valle Bank and smaller institutions.
Speaker 1: And a big thing that they did was say that
Speaker 1: they didn't necessarily need to maintain this thing called liquidity
Speaker 1: coverage ratio, basically maintaining kind of high quality liquid assets,
Speaker 1: stuff that can be turned into cash super duper quickly
Speaker 1: in case there's like a bank run going on, more
Speaker 1: or less, and that they didn't have to do as
Speaker 1: much planning for their failure. Now, whether those rules would
Speaker 1: have prevented this like full on run on a bank
Speaker 1: that we saw last week is questionable. But the central
Speaker 1: intuition behind this deregulation that these banks were less risky
Speaker 1: than the JP Morgans of the world, and that their
Speaker 1: failure could be resolved. So the normal FDIC process turns
Speaker 1: out to have been completely wrong. Got it. I think
Speaker 1: that's very well said. Let me add this is an
Speaker 1: impossible question to answer, but I would love to hear
Speaker 1: you news on it. What if they did just follow
Speaker 1: the normal process for resolving the situation, which is okay,
Speaker 1: two hundred and fifty thousand dollars ensured backstop by the FDICE.
Speaker 1: You could get that on Monday, no problem. The rest
Speaker 1: of the assets of the bank are sold off and
Speaker 1: used to make depositors as whole as possible. Then back
Speaker 1: of the envelope calculations I saw was that they'd probably
Speaker 1: take like a ten percent haircut. They'd get about ninety
Speaker 1: percent of their funds, even the ones that were uninshored.
Speaker 1: If we went that alternative path, what do you think
Speaker 1: would have happened. I think there would have been a
Speaker 1: lot of There's two issues. One is that the worry
Speaker 1: was that there would be companies that had payroll issues
Speaker 1: because they were using Silicon Valley Bank as like a
Speaker 1: transacting bank just to kind of move money from their
Speaker 1: business to their customers and clients and stuff. Now I
Speaker 1: don't know that would have really happened, because if everyone
Speaker 1: was getting fifty percent on Monday or Tuesday, they probably
Speaker 1: could have made it work. The worry was that other
Speaker 1: banks that had a similar kind of risk profile the
Speaker 1: Silicon Valley Bank would also be under tremendous pressure that
Speaker 1: people would withdraw from them and then put their money
Speaker 1: into kind of bigger, safer banks, the JP Morgan's of
Speaker 1: the world, and it kind of be this cascade of
Speaker 1: bank runs. The issue is that, like it's just so
Speaker 1: hard to know whether or not that would have happened,
Speaker 1: but it was definitely a worry. I think what's really
Speaker 1: interesting is that it seems like the federal regulator sorry
Speaker 1: about that, we're not able to find a buyer for
Speaker 1: the bank, which is ideally what they try to do
Speaker 1: is that over the weekend they find someone to take
Speaker 1: over the whole thing. This would happened with Washington Mutual
Speaker 1: when it failed in two thousand and eight. It was
Speaker 1: a three hundred billion dollar bank. But they're able to
Speaker 1: kind of tie it up with JP Morgan that did
Speaker 1: not really seem to be in the offing over the
Speaker 1: weekend or else they would have done it because it's
Speaker 1: kind of the easiest way to do this. It does
Speaker 1: think indicate that there is kind of more pressure on
Speaker 1: the system than in a typical bank failure situation. And finally, Matthew,
Speaker 1: I'd love to get from you, you know, based on
Speaker 1: the actions that the government just took in this non
Speaker 1: bailout bail out, we have effectively not only backstop the
Speaker 1: entirety of you know, posits insured and uninsured across the country,
Speaker 1: we also have effectively, especially with you know, including Signature Bank,
Speaker 1: and this effectively deemed all banks too big to fail.
Speaker 1: How should that be reflected in a different policy approach?
Speaker 1: Because I think the thing you pointed out at the beginning,
Speaker 1: which is so important is that they're being given tremendous
Speaker 1: value and not being asked to change anything at this point.
Speaker 1: Now we expect President Biden speak today, We'll see what
Speaker 1: he has to say, But how should our banking architecture
Speaker 1: reflect this new reality. I think the first thing that
Speaker 1: we'll see happen is that there's going to be a
Speaker 1: big push to kind of re examine this twenty eighteen
Speaker 1: dot Frank rollback, and this idea that these medium sized
Speaker 1: banks are not systemic threats is obviously just not true.
Speaker 1: We've kind of done a dry run of this and
Speaker 1: we found out they are. And then I think we're
Speaker 1: going to see bigger questions where a world in which
Speaker 1: deposits are assumed to kind of always be safe. And
Speaker 1: then it's like, what is the role of a banking
Speaker 1: institution because they're essentially getting this subsidy from the government,
Speaker 1: not so much in being kind of this extraordinary action
Speaker 1: that happened in the weekend, but like they're getting the
Speaker 1: right to essentially create money money like claims, and that
Speaker 1: they're getting this indefinite subsidy in order to do so.
Speaker 1: And I think it's really opened people up this idea
Speaker 1: that like, why can't the government do this to some extent? Now,
Speaker 1: Are we going to get some kind of postal banking
Speaker 1: or kind of basic fed banking for everyone overnight? No,
Speaker 1: But I think it's really kind of opened people up
Speaker 1: to the possibilities that, you know, the government and the
Speaker 1: banking system are really kind of completely entangled with each other.
Speaker 1: It's a very very basic level. And then once you
Speaker 1: realize that, it kind of opens up the field of possibilities.
Speaker 1: So people will be talking about this. Whether it turns
Speaker 1: into legislation is obviously very hard to tell. Yeah, I mean,
Speaker 1: if the taxpayer is ultimately in the US government, ultimately
Speaker 1: one hundred percent on the hook, why are they getting
Speaker 1: to benefit from all the games. Well, the taxpayer is
Speaker 1: backstopping all the losses. It ends up being a sort
Speaker 1: of an insane situation that's just been revealed. Yep, absolutely, Matt,
Speaker 1: it was really nice talking to you. Go ahead and
Speaker 1: check out. We'll put a link to his Twitter and
Speaker 1: to link to the story and all that in the description.
Speaker 1: Appreciate you joining us, man, Thank you, thanks so much.
Speaker 1: Had a great time too, pleasure you man. At the
Speaker 1: same time, we're not going to take our eye off
Speaker 1: of a very important story. Norfolk Southern the CEO was
Speaker 1: called to testify before the Senate and gave some totally
Speaker 1: ridiculous answers. It was at the same time that that
Speaker 1: bipartisan railway safety bill is now being considered before the
Speaker 1: bigger chamber. So as we can recall, it was endorsed
Speaker 1: by bipartison members, both by the Ohio delegation the Pennsylvania delegation,
Speaker 1: as well as some other Republican senators. Now the bill
Speaker 1: has been endorsed by President Biden, it remains to be
Speaker 1: seen whether it can garner enough Republican support. And it
Speaker 1: was in that vein that Senator of jd Vance of
Speaker 1: Ohio actually gave testimony geared specifically towards Republicans who had
Speaker 1: the idea that regulating Norfolk Southern even more might violate
Speaker 1: free market principles. Here's what he had to say. Now,
Speaker 1: we are faced with a choice with this legislation and
Speaker 1: how we respond to this crisis. Do we do the
Speaker 1: bidding of a massive industry that is in bed with
Speaker 1: big government, or do we do the bidding of the
Speaker 1: people who elected us to the Senate into the Congress
Speaker 1: in the first place. I believe that we are the
Speaker 1: party of working people. But it's time to be the
Speaker 1: party of working people. We have a choice. Are we
Speaker 1: for big business and big government or are we for
Speaker 1: the people of East Palestine. It's a time for choosing,
Speaker 1: Let's make the right one. So there were a couple
Speaker 1: of important things that he fit said there time for choosing.
Speaker 1: For most people are not going to know, but it's
Speaker 1: a very famous actually Ronald Reagan's speech that he gave
Speaker 1: I believe it was like nineteen sixty four. It was
Speaker 1: after the Bury I think he was during the Barry
Speaker 1: Goldwater run, and he said, this is a time for choosing, like,
Speaker 1: are we going to be mealy mouthed Eisenhower Republicans are
Speaker 1: going to be hardcore Goldwater. So that was kind of
Speaker 1: an interesting for people who know that was a real
Speaker 1: turn of phrase. The second part, which is very important,
Speaker 1: was that that was geared specifically towards going after the
Speaker 1: people who justify cronyism under free market concerns, as the
Speaker 1: you know what's his name, Troy Nolzy's the House Transportation
Speaker 1: Committee ranking member for or believe, the chairman the Republican side,
Speaker 1: who said, well, hold on a second, we don't know
Speaker 1: if we need more regulation here, and as you know
Speaker 1: he pointed out in his testimony, he's like, we bailed
Speaker 1: out their union support, we have deregulated this industry. It
Speaker 1: is one of the most in bed industries outside of
Speaker 1: like aviation and apparently banking at the government is totally
Speaker 1: involved in So the idea that we don't get to
Speaker 1: set proper safety standards is outrageous. Of course we do. Yeah, well,
Speaker 1: it's been quite a month in terms of recognizing the
Speaker 1: importance of intelligent regulation and the detriment of political capture
Speaker 1: and corruption. And you know, I was skeptical of jd
Speaker 1: Vance's initial comments. Took a while to comma on these.
Speaker 1: Palace Astini went on Tucker and he was more fixated
Speaker 1: on like, oh, this is about wokesm etc. In terms
Speaker 1: of the bill, in terms of what he's saying here,
Speaker 1: this is right on the money, and it's very exciting.
Speaker 1: It's very encouraging to think that there could be this
Speaker 1: kind of bipartisan collaboration. This could have implications for the
Speaker 1: banking system as well as we move forward and say, Okay,
Speaker 1: what is this new world that we live in, what
Speaker 1: does it look like? And what should it look like? Hey,
Speaker 1: is there a role here for someone who's willing to
Speaker 1: speak these kinds of truths to partner with Democrats, even
Speaker 1: if it is in a limited way as it has
Speaker 1: been thus far. So it's really interesting to see. And
Speaker 1: there's a real fight brewing within the Republican Party over
Speaker 1: whether they can actually stand for a different approach on
Speaker 1: economics or whether it just all ultimately collapses into culture
Speaker 1: war as it has been mostly over the past number
Speaker 1: of years. I would hope not. I mean the fact
Speaker 1: though that Senator Fetterman, well you know whoever his staff
Speaker 1: signed on that. You had the Democratic members from Pennsylvania,
Speaker 1: the Bob Casey sign on that shared Brown. I mean,
Speaker 1: these are serious people who are interested in it. The
Speaker 1: President Biden endorsing the legislative you don't see that all
Speaker 1: that often. Yeah, and especially once spearheaded. The real question
Speaker 1: again is going to be those Republican lawmakers. But then
Speaker 1: the secondary question is are these actual CEOs, these executives
Speaker 1: of people responsible to this? Are they going to pay
Speaker 1: and are they actually going to get held responsible here?
Speaker 1: Because who By the way, it's been what more than
Speaker 1: a month now almost into derailment. What is going on?
Speaker 1: I mean, do we know what the toxic levels are
Speaker 1: and water? Are people dead or not? I mean, can
Speaker 1: we can we trace like poisoning of these pets now officially?
Speaker 1: Like you know, just think about what look look at
Speaker 1: what happened with the banking system, and look at this,
Speaker 1: like these people totally almost basically forgotten by financial media
Speaker 1: and many others. Yeah, listen, I tweeted this little save
Speaker 1: here as well. Whatever you think of the SVB bailout,
Speaker 1: it took a weekend for effectively wealthy venture capitalists to
Speaker 1: get their insta bailout from the government, and people in
Speaker 1: East Palestine still do not have a real answer about
Speaker 1: whether they and their kids have been poisoned, whether they're
Speaker 1: going to face elevated cancer risk down the road, whether
Speaker 1: they can go back to their homes, their homes which
Speaker 1: values of which are now completely decimated. No bailout for
Speaker 1: them on the way. So it shows you once again,
Speaker 1: when the government wants to act, and when it involves wealthy,
Speaker 1: influential people, well, hey, it just takes a weekend and
Speaker 1: we've got, you know, trillions of dollars effectively backstopping the
Speaker 1: entire system. When it comes to people who are less
Speaker 1: politically important, less connected, less well off, well, you know,
Speaker 1: it's a month down the road and the best that
Speaker 1: they've done, and this is outrageous to me. They are
Speaker 1: now finally the phased like, oh maybe we should test
Speaker 1: for dioxids, which are incredibly toxic and linger and have
Speaker 1: known incredibly detrimental impacts. They're finally now testing for it,
Speaker 1: but they're still asking Norfolk Southern to spearhead the testing
Speaker 1: the polluters themselves. It's it's absolute insand I just I
Speaker 1: can't even wrap my head around it. So it's a
Speaker 1: clear contrast in response and in care and concern from
Speaker 1: our government on really on both sides of Aisle towards
Speaker 1: you know, the way the banking sector was handled and
Speaker 1: the way these people in East Palestine have been dealt with. Yeah,
Speaker 1: I think you're very right. Senator Bernie Sanders also shredded
Speaker 1: the CEO in testimony, did a great job. Let's take
Speaker 1: a listen. Norfolk Southern provided ten billion dollars in stock
Speaker 1: buybacks recently. Can you tell the American people and your
Speaker 1: employees right now that are in order to improve morale
Speaker 1: in your workforce, that you will guarantee at least seven
Speaker 1: paid six days to the fifteen thousand workers you employed, Senator,
Speaker 1: With our latest agreement with our employees, which included a
Speaker 1: historic twenty four percent wage increase and access to premium
Speaker 1: healthcare benefits, we immediately pivoted to talking to each of
Speaker 1: our local I want, I've been deeply involved. I introduced
Speaker 1: the mens then on the floor. I know the issue, Senator.
Speaker 1: I share your focus on our employees. I will commit
Speaker 1: to continuing to discuss with them important quality of life
Speaker 1: issues with our local craft colleagues. But all do respect.
Speaker 1: You sound like a politician. He is the sure the
Speaker 1: will not say that he will increase paid sickly. This,
Speaker 1: of course was the central issue in terms of a
Speaker 1: real workers threatening strike that was ultimately crushed by Biden
Speaker 1: and the Democrats and in combination with the Republicans. So
Speaker 1: you know, senator standards still saying, hey, listen, you all
Speaker 1: are profitable beyond belief. You have plenty of money floating
Speaker 1: around to dole out to your executives and to your
Speaker 1: shareholders through stock buybacks, which by the way, should be
Speaker 1: banned and illegal. How about you use this opportunity to
Speaker 1: provide seven paid sick days to your workers? Is that
Speaker 1: too much to ask? And of course the CEO has
Speaker 1: nothing to say, will not comment to it. And I
Speaker 1: think this one is just like the banking system. So
Speaker 1: corporate corruption a real key theme of the show here,
Speaker 1: and I just I can't help but look at this
Speaker 1: and also know one thing that that bill already it
Speaker 1: faces a very difficult climb up, like are you really
Speaker 1: going to be able to get nine Republicans. We've only
Speaker 1: got four that as signed on right now. President Biden
Speaker 1: endorsing the bill frankly problems makes it more difficult because
Speaker 1: now there's oh, we're sending up against Biden woke big
Speaker 1: government trying to regulate the railroad, and then same thing
Speaker 1: on Norfolk Southern. I mean, they're not even getting pressed
Speaker 1: on the stock buyback issue. It's like with the banks.
Speaker 1: I have zero confidence that any follow on regulation will
Speaker 1: actually occur to stop this type of behavior, and that
Speaker 1: will not transfer the increased FDIC fees to every single
Speaker 1: one of us. They will continue to operate, not only
Speaker 1: business as usual. Business is better because now the losses
Speaker 1: on your balance sheet are backstopped and guaranteed by the FED.
Speaker 1: The increase in the rates, it doesn't affect them. It
Speaker 1: only affects you and I and our customers and the
Speaker 1: people who watch our show. Blue collar people out there
Speaker 1: getting fired right now, oh, because the Fed is raising
Speaker 1: rates and their companies can't afford to employ them. That's
Speaker 1: the next part, Like only us, those who are merely
Speaker 1: not in the very very top of the system. We're
Speaker 1: all the ones who get to pay the price for
Speaker 1: all of these big policies, but when they fail, they
Speaker 1: get to pay themselves bonuses. He appears before the sending
Speaker 1: quote sounds like a politician. I I mean, look if
Speaker 1: the guy the fact that Guy Stone even has his
Speaker 1: job is crazy in this environment. Yeah, so, I don't know,
Speaker 1: I feel just discussed on days like this. The FED
Speaker 1: piece is so critical to underscore because it really does
Speaker 1: reveal everything. They have had a stated overt policy at
Speaker 1: the FED of crushing the labor market, increasing unemployment and
Speaker 1: slowing wage gains. Okay, their explicit policy is to kill jobs.
Speaker 1: That is the policy of the interest rate hikes, which
Speaker 1: has not been very successful in terms of dealing with inflation,
Speaker 1: which is what we actually want them to deal with.
Speaker 1: But they're explicit policy is we want to kill jobs here.
Speaker 1: But the minute there were concerns about job loss in
Speaker 1: Silicon with these venture backed companies, then they spring into action.
Speaker 1: It just shows you. It just shows you who matters,
Speaker 1: who they care about, and who doesn't. And the difference
Speaker 1: between the response with Norfolk Southern and with East Palestine
Speaker 1: versus the response in the banking system also shows you
Speaker 1: who counts, who matters, who they can marshal resources for,
Speaker 1: who they can leap into quick and agile action for,
Speaker 1: and who is facing a month down the road can't
Speaker 1: even get a straight answer about test can't get health
Speaker 1: real health care, and you have no bail out on
Speaker 1: the way for them in terms of their homes and
Speaker 1: their businesses and any potential medical bills down the road.
Speaker 1: So it really is a disgraceful and revealing moment for
Speaker 1: our country about the way that all of this works.
Speaker 1: At the same yeah, at the same time, we wanted
Speaker 1: to cover these some interesting comments from former Vice President
Speaker 1: Mike Pence. Of course, famously, on January sixth, you had
Speaker 1: people who were in the Capitol who were channing Mike Pence.
Speaker 1: He was a focus of a lot of ire because theoretically,
Speaker 1: the idea that took hold the maggot bas is that
Speaker 1: he could individually stop the electoral count and he can
Speaker 1: sort of throw things towards Donald Trump. Now, he certainly
Speaker 1: didn't feel that he had that authority, and most people
Speaker 1: don't think that he had that authority. But anyway, that's
Speaker 1: how he becomes the center of attention. On January sixth, finally,
Speaker 1: at the Gridiron Dinner, which is like the most swampy
Speaker 1: insidery thing of all time, he made some fairly strong
Speaker 1: comments about his former friend and colleague there, Donald Trump.
Speaker 1: Let's go and put this up on the screen. Here's
Speaker 1: the media headline, and says angry Mike Pence blast Tucker
Speaker 1: Carlson's January sixth revision, levels Trump for endangering his family
Speaker 1: and says history will hold Donald Trump accountable. Let me
Speaker 1: read you specifically, the comments that are reported here can't
Speaker 1: There is no video allowed inside of this swampy clubby dinner,
Speaker 1: but there are a lot of reporters there, so specific
Speaker 1: comments definitely make their way out. He said in regards
Speaker 1: to Tucker Carlson's portrayal of January sixth. Quote, tauris don't
Speaker 1: injure one hundred and forty police officers by sightseeing tourus,
Speaker 1: don't break down doors to get to the speaker of
Speaker 1: the House or voice threats against public officials. The American
Speaker 1: people have a right to know what took place at
Speaker 1: their capital on January sixth. I expect members of Fourth
Speaker 1: Estate to continue to do their job. He said, make
Speaker 1: no mistake about it. What happened that day was a disgrace,
Speaker 1: and it mocks decency to portray it in any other way.
Speaker 1: So that was sort of in response to the Tucker
Speaker 1: Carlson portrayal of events. He also said about the president,
Speaker 1: former president, I was not afraid, but I was angry.
Speaker 1: President Trump was wrong. I had no right to overturn
Speaker 1: the election, and his reckless words endangered my family and
Speaker 1: everyone at the Capitol that day. He goes on to say,
Speaker 1: I know that history will hold Donald Trump accountable. What
Speaker 1: did you make of him making these comments, the timing,
Speaker 1: the venue. I'm not saying he's wrong, I'm just like,
Speaker 1: do you actually have any political sense whatsoever? A why
Speaker 1: would you choose the Gridiron dinner to place to criticize Trump?
Speaker 1: The literal peak of the swamp. This is the closed door,
Speaker 1: white tie and tails dinner that anybody who's anybody in
Speaker 1: Washington goes to. I saw some of the highlights on Instagram.
Speaker 1: General Millie and all those you know, the generals and
Speaker 1: all those other people are all congregated with the TV
Speaker 1: news hosts that are all together at the same time,
Speaker 1: in terms of what he's laying out, this is not
Speaker 1: a popular view in the Republican Party. Now, it might
Speaker 1: be a popular view in the general election, but you
Speaker 1: need to win a Republican primary first. So I just
Speaker 1: don't know what his angle is like. Once again, his
Speaker 1: only real path, I guess, is to shore up the
Speaker 1: evangelicals and then get all of the anti Trump vote
Speaker 1: behind him. That's why consistently has some seven percent or
Speaker 1: so of the Republican electorate backhand. But we've already gone
Speaker 1: through a cycle where GOP primary voters by and large
Speaker 1: backstop the steal candidates and those who have the Tucker
Speaker 1: view of January sixth than those who have the Mike
Speaker 1: Pence view. So you're intentionally putting yourself on the side
Speaker 1: where you have the most competition the vig rodmswami's Nikki Haley,
Speaker 1: Tim Scott, all these other candidates. So what is the
Speaker 1: political calculus behind doing this? Now, if you just think it,
Speaker 1: that's fine, totally fine, But then don't delude yourself into
Speaker 1: thinking this is a viable path to the GOP nomination.
Speaker 1: That was my takeaway from it. Yeah, I certainly agree
Speaker 1: with all of his comments here, no doubt about it.
Speaker 1: But it's like it's a little late, buddy, Yeah, I know,
Speaker 1: you know, the case is kind of already even you've
Speaker 1: allowed the cake to be baked on the Republican side
Speaker 1: about their the Bass view of January sixth, the Bass
Speaker 1: view of stop the Deal, the basis view of you
Speaker 1: even and your actions on that day, And so, I mean,
Speaker 1: the only thing I can Maybe it's just not political calculus,
Speaker 1: Maybe he just wanted to say what he actually thought,
Speaker 1: but it is, you know, it would have been more useful,
Speaker 1: like right after the fact. And at the time there
Speaker 1: was a little bit of dabbling from Republicans Minch McConnell
Speaker 1: and others decrying the events of that day. There was
Speaker 1: a little bit of a thought about maybe this is
Speaker 1: our chance to get rid of Trump. But ultimately everybody's
Speaker 1: too afraid to actually have any sort of like collective
Speaker 1: action to move on from this guy, and so you
Speaker 1: end up with week effectively weak attempts like this that
Speaker 1: are going to do nothing in terms of dislodging Trump,
Speaker 1: but are certainly going to make it more difficult for
Speaker 1: Mike Pence to be successful in Republican primary. Not that
Speaker 1: I thought he was going to be successful in the
Speaker 1: Republican primary anyway. So it's sort of without consequence in
Speaker 1: that regard. Yeah, it's just like what are what are
Speaker 1: exactly are we doing here? Are we running for president?
Speaker 1: Or are we moralizing? Because you know, that's just not
Speaker 1: how it's going to work at the end of the
Speaker 1: day for you and Pence in general. This is his
Speaker 1: you know, latest blast against Trump. But here's the name.
Speaker 1: He still can't even say his name. He still doesn't
Speaker 1: say his name. Yeah, he just says he will be
Speaker 1: held account. What does that even mean? Say it? Make
Speaker 1: the case I stood buy him for four years. He
Speaker 1: betrayed me, He's a coward, say something like that. That's
Speaker 1: actually a strong point. And who's going to hold him antible?
Speaker 1: Because it's sure as hell doesn't feel like it's going
Speaker 1: to be You feel like history, what is it? Like?
Speaker 1: What what does that mean? It doesn't really mean anything.
Speaker 1: And so it's it's a very squishy, belated, half hearted
Speaker 1: attempt to draw some blood here. And you know, and
Speaker 1: then when you look at like the issue set that
Speaker 1: Mike Pence has staked down in opposition to Trump, would like, oh,
Speaker 1: Trump is going to protect so security and I want
Speaker 1: to privatize it. Okay, you know Trump won't do a
Speaker 1: national abortion band, but I will. All right, good luck, Okay,
Speaker 1: It's like, well, you're actually making a pretty good case
Speaker 1: for Trump. So all right, Crystal, what are taking to
Speaker 1: look at? Well, Guys, today we have extensively covered the
Speaker 1: collapse of Silicon Valley Bank. We talked about the concentrated
Speaker 1: risk that they took on. We talked about the calls
Speaker 1: for bailouts, the potential contagion, and crucially, the political corruption
Speaker 1: and capture that led to that bank winning looser regulations
Speaker 1: during the Trump years. But for some this isn't a
Speaker 1: story about money and power. It's about something else altogether,
Speaker 1: the dreaded all encompassing. So I don't have any specific
Speaker 1: information about any Florida bank similar to Silicon Valley Bank,
Speaker 1: and hopefully that remains the case. You know, Maria just
Speaker 1: appears to me, I mean, this bank, they're so concerned
Speaker 1: with DEI and politics and all kinds of stuff. I
Speaker 1: think that really diverted from them focusing on their core mission.
Speaker 1: Total nonsense. Ron DeSantis was not the only one, though,
Speaker 1: Donald Trump Junior tweeted quote SVB is what happens when
Speaker 1: you push a leftist, woke ideology and have that take
Speaker 1: precedent over common sense business practices, this won't be the
Speaker 1: last failure of this nature, so long as people are
Speaker 1: rewarded for pushing this bs. Of course, that's a very
Speaker 1: convenient take, since the deregulation pushed by industry, including SVB,
Speaker 1: was signed into law by his dad, and that is
Speaker 1: a huge part of this story. Now, the Daily Mail
Speaker 1: and the New York Posts are both running with this
Speaker 1: wokeism narrative. Though. Here's the New York Post. They say,
Speaker 1: while Silicon Valley Bank collapsed, top executive pushed woke programs.
Speaker 1: Apparently there was some lady involved in risk management at
Speaker 1: the bank's UK branch could engage in some classic corporate
Speaker 1: virtue signaling, like launching a pride campaign a blog that
Speaker 1: had an LGBTQ focus. What does that have to do
Speaker 1: with the stunning collapse of the bank and the subsequent
Speaker 1: debates on balance and the subsequent actual balance. Absolutely nothing.
Speaker 1: This alleged woke person did not force the bank to
Speaker 1: lobby Congress on reducing stress tests. They didn't cause the
Speaker 1: FED to hike rates, popping the Silicon Valley bubble. Their
Speaker 1: Pride Month festivities had nothing to do with foolishly putting
Speaker 1: the bulk of the bank's cash into interrastraight sensitive treasuries.
Speaker 1: Their blog posts did not create the Silicon Valley herd
Speaker 1: mentality which sparked a bank run. The presence or lack
Speaker 1: of wocism is an irrelevant sideshow here, but plenty will
Speaker 1: fall hook line and sinker for this laughable distraction because
Speaker 1: for some entirely too online people, led by a cadre
Speaker 1: of right wing media and political elites, opposition of wokeism
Speaker 1: has become an all consuming, all encompassing worldview, blotting out
Speaker 1: any other potential political understanding. Anti woke brand lead to
Speaker 1: at least as goofy and authoritarian and approach to politics
Speaker 1: as woke brainworms do. Anti Wochism is goofy, and that
Speaker 1: it would lead you to look at a train crash
Speaker 1: and cover up caused by corporate greed and instead fixate
Speaker 1: on some dumb comments about white construction crews, or to
Speaker 1: look at a bank crash caused by deregulation and corruption
Speaker 1: and think it has anything to do with some stupid
Speaker 1: Pride Month celebration. Anti Wochism is authoritarian in that it
Speaker 1: paints everything as either good or evil. This black and
Speaker 1: white view of the world, complete with existential warnings that
Speaker 1: then justifies illiberal tactics things like banning books, curriculum, and
Speaker 1: public artistic expression. Now, I consider myself to be an
Speaker 1: opponent of wocism. I have called out cancelations of people
Speaker 1: I profoundly disagree with. I've stood up for the rights
Speaker 1: of comedians to make edgy or even offensive jokes. I've
Speaker 1: decried the hollow identity politics that sells racial diversity and
Speaker 1: elite circles as a panacea for working class Americans. I've
Speaker 1: opposed the oppression Olympics type of politics that has human
Speaker 1: beings vuying for victimhood points based on immutable personal characteristics.
Speaker 1: And I have to cried these sixteen to nineteen Robin
Speaker 1: Dangelo grifter types who push an ideology that is so
Speaker 1: woke it's actually racist, arguing things like math is white supremacist,
Speaker 1: and selling then or diversity courses which don't accomplish anything
Speaker 1: except making a handful of so called anti racist consultants
Speaker 1: wildly rich. But the answer to that authoritarian trend among
Speaker 1: liberals and left liberals is not an equal and opposite
Speaker 1: myopic authoritarianism on the right. Yet that is in fact
Speaker 1: the direction which has now been fully embraced by plenty.
Speaker 1: The goofy distraction. Anti woke mode is most clearly demonstrated
Speaker 1: by presidential candidate Vivic Ramaswami. He has launched his bid
Speaker 1: based on his claim to being the CEO of anti
Speaker 1: woke Now. The fundamental un seriousness of the ideology is
Speaker 1: demonstrated by the mess that is Vivik's platform. When Sovereign
Speaker 1: Marshall interviewed him about his key policy priorities, he didn't
Speaker 1: focus on jobs, healthcare, corruption. Instead, he named checked ending,
Speaker 1: affirmative action in federal government hiring, and a vague program
Speaker 1: a building national identity. Now, however you feel about it,
Speaker 1: firmative action ending it isn't going to solve our core
Speaker 1: problems in the same way that instituting it did not
Speaker 1: solve our core problems. And people can't buy a house
Speaker 1: or afford their prescriptions on national identity. The authoritarian anti
Speaker 1: woke mode is most clearly demonstrated by Rond de Santis.
Speaker 1: He too is hoping to use anti wokeness to launch
Speaker 1: him into the presidency. According to Pan America, thousands of
Speaker 1: books were banned across thirty two states this school year,
Speaker 1: and Florida, led by Rondo Stantis, led the way now
Speaker 1: to Santis also banned the teaching of certain concepts in school,
Speaker 1: pushed to limit tenure for professors, and is working to
Speaker 1: mandate Western civilization courses in public colleges. So, rather than
Speaker 1: embracing openness, debate, and tolerance, he's actually using the force
Speaker 1: of government to silence ideological opponents and mandate the teaching
Speaker 1: of his own preferred ideology. And to make the direction
Speaker 1: completely clear, he also passed a law that limits protest. Now,
Speaker 1: there is, of course a need to counter wokeism. I
Speaker 1: am on board with that. But the opposite of wocism
Speaker 1: is tolerance. It's open debate. It's an embrace of real
Speaker 1: democracy that devolves power from elites to the American people.
Speaker 1: It would consistently decry censorship rather than just when it
Speaker 1: happens to one's ideological allies. It would value nuance and
Speaker 1: solidarity among the population rather than the vicious politics of
Speaker 1: personal destruction embodied by wocust cries of racist and anti
Speaker 1: wocist cries of groomor it would shift consciousness from individual
Speaker 1: villains to systems that we can work together to perform
Speaker 1: and change. And it would certainly not counter a woke
Speaker 1: cult with a new anti woke cult. But wocism and
Speaker 1: anti wochism are what I would call anti politics because
Speaker 1: they keep their adherents focused on individual level grievances about
Speaker 1: the ideology or personal traits of this executive or that
Speaker 1: executive versus the type of collective problems which we can
Speaker 1: actually deal with through small, de democratic politics. They keep
Speaker 1: us all fighting online about who's good and who's bad.
Speaker 1: We feel like we're doing politics, but we aren't not really,
Speaker 1: because there are no real society level solutions in woke
Speaker 1: or anti woke fundamentalism. It's only an endless power struggle
Speaker 1: against your ideological adversaries. If America is an irredeemably racist country,
Speaker 1: there's no political cure, and progress can only be one
Speaker 1: through pushing irredeemably racist people out of the public square.
Speaker 1: And if the woke mind virus is destroying America and
Speaker 1: liberals are irredeemably woke, well then you may just see
Speaker 1: Marjorie Taylor green suggestion of a literal secession via national
Speaker 1: divorce as the only possible workable solution. Note how all
Speaker 1: of this is unbelievably convenient for those who benefit from
Speaker 1: the current disgusting status quo. Nothing could be better for
Speaker 1: Wall Street crooks, corporate price gougers, and corrupt politicians if
Speaker 1: the whole nation is squabbling over some window dressing diversity
Speaker 1: initiative or their phony esg environmental commitments. Oh no, don't
Speaker 1: make me put short term stock prices above my bullshit greenwashing.
Speaker 1: That'd be terrible. Whatever will we do if we have
Speaker 1: to take the meaningless Black Lives Matter banner down from
Speaker 1: our website homepage, all while they pass another corporate tax
Speaker 1: cut and deregulate another key industry. Bottom line here, wokeism
Speaker 1: and anti wokeism now deeply confuse our politics because they
Speaker 1: are divisive politics. That's okay, but they have the divisions
Speaker 1: all wrong. They put neighbor against neighbor, community against community,
Speaker 1: when we should all be banding together to fight against
Speaker 1: the elites of hijacked our democracy. That is the real
Speaker 1: way to fight the so called woke mind virus. Sager,
Speaker 1: I thought I was going to lose my mind what
Speaker 1: I say, and if you want to hear my reaction
Speaker 1: to Crystal's Monologue become a premium subscriber today at breakingpoints
Speaker 1: dot Com. All right, Tiger were looking at well. If
Speaker 1: you had asked me three years ago, in the middle
Speaker 1: of lockdown, whether we're still debating the origin of COVID,
Speaker 1: I would have said that you were nuts. Clearly it
Speaker 1: would have been settled. And yet March of twenty twenty
Speaker 1: three may go down as one of the most significant
Speaker 1: times in COVID history as when the truth actually began
Speaker 1: to come to light. For nearly two years, a stalemate
Speaker 1: was reached where people who were banned from social media
Speaker 1: for the lab leak theory had their accounts restored. The
Speaker 1: media basically ignored the reams of evidence and emails that
Speaker 1: showed a full scale cover up by doctor Fauci, by
Speaker 1: Peter Dazak, the NIH and the scientific community of lab Leak,
Speaker 1: and it seemed that we would all just quote never know.
Speaker 1: But then the Republicans actually won a slight majority in
Speaker 1: the House of Representatives, things began to shift. The GOP
Speaker 1: had made it known it wasn't going to drop its
Speaker 1: investigation on doctor Fauchi in the origin of COVID. Thus,
Speaker 1: the intelligence community began to prepare documents they knew inevitably
Speaker 1: would be subpoena LO and behold, it turned out that
Speaker 1: for literally months, the Energy Department in the FBI were
Speaker 1: sitting on direct intelligence assessments that COVID did in fact
Speaker 1: leak from the lab. This was extraordinary and yet met
Speaker 1: with the typical treatment by the media. Oh it was
Speaker 1: only low confidence. Oh, but other intelligence agencies don't agree,
Speaker 1: as if all intel agencies are created equally. Again, it's
Speaker 1: worth noting that the Energy Department people who came up
Speaker 1: to this conclusion are the only ones tasked with actual
Speaker 1: lab safety. Perhaps even more unsurprising, the recent revelations have
Speaker 1: caused a supposedly retired doctor Feans Fauchi to come out
Speaker 1: of hiding to defend his reputation and his life's work,
Speaker 1: gain of function research. Fauci, we need to remember, was
Speaker 1: a chief proponent of gain of function research at the NIH.
Speaker 1: He personally overturned the Obama ban on gain of function.
Speaker 1: He funneled millions of dollars to his pet projects, to
Speaker 1: scientists across the United States, and to the Wuhan Lab
Speaker 1: to not only continue it, but expand gain of function.
Speaker 1: After the pandemic, the lab leak itself, is not just
Speaker 1: about how COVID started, as important as that is, It's
Speaker 1: about protecting his scientific legacy, the idea that scientists can
Speaker 1: play god, that they can bioengineer viruses and engineer the
Speaker 1: cures for future pandemics. But as doctor Redfield laid out
Speaker 1: the former CDC director in his most recent testimony, gain
Speaker 1: of function has never, to his knowledge, been used to
Speaker 1: stop a pandemic. Instead, it most likely is the one
Speaker 1: that started that one of the worst pandemics in modern history.
Speaker 1: Let's take a listen again, So one other path of
Speaker 1: questioning for you, doctor Rifflin. Proponents of this research claim
Speaker 1: it may result in vaccines or maybe even stop a pandemic.
Speaker 1: Doctor Redfield, has Gain of Function created any life saving
Speaker 1: vaccines or therapeutics to your knowledge? Not to my knowledge,
Speaker 1: has gain of Function stopped a pandemic in your opinion? Now,
Speaker 1: in the contrary, I think it probably caused the greatest
Speaker 1: pandemic or world of scene. Do you find any tangible
Speaker 1: benefits to Gain of function research at this time? I
Speaker 1: personally don't, but I do want to stress I think
Speaker 1: the men and women that supported are people of good
Speaker 1: faith because they truly believe it's going to lead to
Speaker 1: a potential benefit. I disagree with that assessment. This, more
Speaker 1: than anything, was what Fauci could not stand, and his
Speaker 1: full fledged media campaign immediately kicked into high gear. He
Speaker 1: played the game where he went on Fox to pretend
Speaker 1: he was going to get asked real questions, but picked
Speaker 1: host Neil Cavudo, who, I guess. Let's just say I've
Speaker 1: been very sympathetic to the Fauci throughout his tenure on Fox.
Speaker 1: Let's take a listen to that interview. Take me out
Speaker 1: of the picture, Neil, and look at a whole array
Speaker 1: of virologists and scientists to do research that's absolutely critical
Speaker 1: for the health of the country. Some of that involves
Speaker 1: manipulating organisms. You want to call it gay function. It
Speaker 1: really is not in many respects, but when it is,
Speaker 1: it needs to be very well regulated. If you shut
Speaker 1: off all gain of function research, did you get the
Speaker 1: flu shot to see and Neil, if you did, and
Speaker 1: you got it from an influenza vaccine, that was gain
Speaker 1: of function that made that influenza vaccine. That is what
Speaker 1: it's all about. The entire thing is about protecting the
Speaker 1: scientific funding mechanism he created with his cronies and labs
Speaker 1: across his country. Conveniently, is also used by big farmer companies,
Speaker 1: like he said, to create flu vaccines and other vaccines
Speaker 1: that are routinely taken by millions across this country. Maybe
Speaker 1: it's right, maybe it's wrong. Something we have learned on equivocy.
Speaker 1: Though from all this, you cannot trust them. You have
Speaker 1: to distrust, verify, look at the data that you've just verified,
Speaker 1: and then verify it's the real data, to make sure
Speaker 1: that what they're telling you is real and the real crescendo, though,
Speaker 1: of the Fauci media campaign, came in his second home
Speaker 1: CNN shim Acosta show on this weekend. Let's take a listen.
Speaker 1: We've seen Elon Musk tweet that his pronouns he's the
Speaker 1: owner of Twitter, that his pronouns are prosecuted. Fauci, others
Speaker 1: and the GOP have talked about arresting you and prosecuting
Speaker 1: you for your handling of COVID. What's your response to that,
Speaker 1: your response to Musk and what has that been like
Speaker 1: for your family? Well, I mean, there's no response to that. Craziness, Jim,
Speaker 1: I mean, prosecute me for what? What are they talking about?
Speaker 1: I mean, I wish I could figure out what the
Speaker 1: heck they were talking about. I think they're just going
Speaker 1: off the deep end. That's the answer to your first question.
Speaker 1: It doesn't make any sense to say something like that,
Speaker 1: and it actually is irresponsible. Of course, it's going to
Speaker 1: have a difficult effect and a deleterious effect on my family.
Speaker 1: I mean, they don't like to have me getting death
Speaker 1: threats all the time. Every time somebody gets up and
Speaker 1: spouts some nonsense that's misinformation, disinformation and outright lies, somebody
Speaker 1: somewhere decides they want to do harm to me and
Speaker 1: or my family. As always, Acosta is too low IQ
Speaker 1: to ask real question, and Fauci plays the lowest card,
Speaker 1: conflating criticism of him with the safety of his family. Now,
Speaker 1: of course, if crazy people want to actually attack Fauci,
Speaker 1: that's bad, but you can't blame press him for questions
Speaker 1: on one of the most significant events of the century
Speaker 1: on attacks on him. As for prosecuting, last time I checked,
Speaker 1: lying to Congress under oath is actually a crime, And
Speaker 1: if you recall his myriad exchanges under oath with Rand Paul,
Speaker 1: he pretty much is dead to rights a liar in
Speaker 1: trying to say he never funded gain of function research
Speaker 1: at the Wuhan Lab or anywhere. This is the ultimate canard.
Speaker 1: He never funded gain of function research at the Wuhan Lab.
Speaker 1: But as he says on Fox, but did you know
Speaker 1: the gain of function is vital for the flu shot?
Speaker 1: Which is it? Do you defend it or not? He
Speaker 1: won't say it, and he'll never take an interview that,
Speaker 1: it seems where somebody knows the difference or even the
Speaker 1: time to really get into the weeds on that question.
Speaker 1: But shouldn't mistake that as well as about you not
Speaker 1: being on the defensive. As you saw with his most
Speaker 1: recent appearance on Anderson Cooper, the Energy Department's conclusion has
Speaker 1: actually forced even them to ask him about it. The
Speaker 1: more actual raw information that comes to light, like the
Speaker 1: emails that show he prompted the initial cover up and
Speaker 1: the intel agencies coming to the conclusion it was a lably,
Speaker 1: he has to answer questions. He is now using the
Speaker 1: years of false capital that he built up during the
Speaker 1: pandemic to do what any ego maniac like him wants.
Speaker 1: He wants to die a hero, lionized by the press,
Speaker 1: a savior when he may be the pandemic's biggest villain.
Speaker 1: Christ'll actually the House of Representatives just voted yesterday, and
Speaker 1: if you want to hear my reaction to Sagre's monologue,
Speaker 1: become a premium subscriber today at Breakingpoints dot Com. Thank
Speaker 1: you so much, guys for watching. Really appreciated it. Shout
Speaker 1: out to everybody's signing up to taking advantage of the
Speaker 1: new Spotify Full Show. I know a lot of you
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