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<https://www.washingtontimes.com/news/2023/mar/15/silicon-valley-banks- woke-agenda-thrived-while-man/>

The woke philosophy of Silicon Valley Bank didn’t directly cause the cash crunch that led to its rapid failure, but analysts say the bank’s
management paid more attention to its climate and social justice mission
than its financial health.

The analysts said SVB officers were heavily focused on so-called ESG
policies while ignoring risk management responsibilities that could have detected trouble in time to save it from collapse and government
intervention last week.

ESG stands for environmental, social and governance.

In another sign of trouble in the banking industry, officials in
Switzerland on Wednesday were discussing with Credit Suisse Group AG ways
to stabilize the huge bank after comments by its biggest shareholder led
to a fall in its stock value to a record low. Saudi investors said they
would no longer fund the bank.

In the U.S., the recriminations continued over the bank collapse and the
Biden administration’s rescue of SVB and New York’s Signature Bank. The
Justice Department and the Securities and Exchange Commission are
investigating SVB‘s downfall, including stock sales by its top executives.

Many of the questions are focusing on poor management.

Only one member of SVB‘s board of directors, Tom King, had a career in the financial industry. The others were major campaign donors to Hillary
Clinton, Rep. Nancy Pelosi and other Democrats.

Bank director Garen Staglin, 78, is a winery owner in California who
donated $54,000 to Mrs. Clinton’s campaign in 2016. Director Kate Mitchell
is a venture capitalist who also donated heavily to Mrs. Clinton’s
presidential campaign. After Donald Trump won the election, she prayed for guidance at a Shinto shrine in Japan.

As an example of the bank’s left-wing agenda, SVB committed $5 billion in
2022 toward “loans, investments, and other financing to support
sustainability efforts” through 2027. The bank also pledged to be carbon- neutral by 2025 and promoted DEI — diversity, equity and inclusion — initiatives.

SVB donated more than $73 million to the Black Lives Matter movement and
other social justice causes, according to online data first reported by
The Federalist.

For most of the past year, the bank’s managers left vacant the post of
risk management officer.

“The reason for the failure was clearly poor judgment, poor management and maybe lack of supervision by regulators,” said David Kass, who teaches
advanced financial management and business finance at the University of Maryland’s School of Business. “The bank did not have a risk officer.
That’s absurd. It was just very poor management at the bank for investment policy.”

As for a connection between the bank’s woke policies and its collapse, Mr.
Kass said, “I don’t see the link.”

The bank’s troubles became public on March 8 with a public notice that SVB
had offloaded $21 billion worth of securities and intended to sell $1.25 billion of its stock. The credit rating firm Moody’s downgraded SVB.

By the next morning, venture capital investors in SVB were warning one
another about the bank’s apparent cash shortage. That day alone, investors pulled out roughly $42 billion from SVB accounts. State and federal
regulators closed the bank the next day, March 10.

Economists say the acute problem was that SVB held an unusually high
percentage of its $209 billion in assets in Treasury bonds and mortgage-
backed securities. As the Federal Reserve raised interest rates rapidly in
the past year to fight soaring inflation, the value of the long-term debt
held by SVB fell.

As panicked investors withdrew money last week, the bank couldn’t easily
sell its assets to cover its deposits.

“The primary reason behind the collapse is the fact that the bank was
taking in depositor money and putting it in investments that were not risk-appropriate,” said Joel Griffith, an economic policy researcher at
the conservative Heritage Foundation. “Those investments plunged in value
when interest rates went up.”

As another example of poor management, Mr. Griffith said, SVB was paying
its customers as much as 4.5% interest on their bank deposits.

“Of course, none of us are getting that on our checking account,” he said.

A woke agenda didn’t directly doom the bank, Mr. Griffith said, but it
diverted management’s focus from the company’s basic financial health.

“A lot of the managers were focused on a number of woke causes, including
the risk manager in the United Kingdom who was involved in a number of
social justice causes,” he said. “But the bottom line is, they apparently weren’t focused on actually managing the risk of the bank. Even when they
had all of these ESG, DEI working groups and the big focus on ensuring
that they were funding a lot of woke investments in the green energy
space, at the same time they were doing all that, they went more than half
this past year without a risk manager here in the United States office.”

Mr. Griffith said many of SVB‘s investors were venture capitalists who
reaped millions of dollars in government aid during an unprecedented pandemic-era spending binge by the Trump and Biden administrations.

“A lot of the venture capital firms in that so-called clean energy space
that had put their money on deposit at SVB, those are government-
subsidized companies,” he said. “They are taking advantage of renewable
energy mandates, of tax credits, of tax subsidies. They were awash in
capital because so much money had been put into the stock market during
COVID with all the money that was printed. So they were already benefiting
at the expense of taxpayers. And then they put money at a woke bank,
Silicon Valley Bank. These are sophisticated investors. These people are
worth millions, if not billions, of dollars. And they chose to put those
assets at risk, and there is no reason why they should be demanding a
bailout.”

At Signature Bank, Mr. Griffith said, managers parked deposits in long-
term debt while vowing that the bank wouldn’t invest in fossil fuel
companies, firms that built prisons or companies that manufactured weapons
for the U.S. military.

“Those are probably three of the safest investments a bank could make,” he said.

Sen. John Kennedy, Louisiana Republican and a member of the Senate Banking Committee, said Wednesday that SVB‘s managers were not focused on what
mattered most.

“If the management of Silicon Valley Bank had known the difference between
a banking textbook and an L.L. Bean catalog, Silicon Valley Bank would
have never bought securities that are so sensitive to interest rates
without hedging that risk, and it’s a very easy thing to do,” he said on
the Senate floor.

Mr. Kennedy also blamed regulators for failing to detect problems at SVB
before it was too late.

“Where were the regulators?” he said. “I guess they were asleep, but this
whole debacle could have been avoided if the regulators had just done
their job and stepped in and said, ‘Silicon Valley Bank, what you’re doing
is dumb, and you can’t do it anymore.’”

Mr. Kass said even some stock analysts at major banks were rating SVB
shares as a good buy within one week of its collapse. He noted that
JPMorgan and Wells Fargo rated SVB stock as “overweight” or worth buying
on March 9 and Goldman Sachs rated it as “buy” on March 3.

“A lot of people were asleep at the switch,” he said.

• Dave Boyer can be reached at dboyer@washingtontimes.com.

Comments:

rnnicomments12
Mar 17
A woke agenda didn't directly doom the bank Mr. Griffith said. Yet the
article states bank officers were heavily focused on ESG policies. So much
so that they had not filled a risk managers position and only one of the
board of directors had experience in the financial industry. The other
members were major political campaign donors. Sounds as if Mr. Griffith's judgement that woke agenda policies didn't directly doom the bank may be
poor judgement on his part.

conscious1
Mar 16
"The woke philosophy of Silicon Valley Bank didn’t directly cause the cash crunch that led to its rapid failure"


Woke managers who didn't have a clue how the real world or banking risk
works did directly cause the failure by focusing too much on ideology
rather than sound financials. I would call that a direct link. Maybe woke investments wasn't what caused the collapse but the intellectual myopia of those managers certainly was.


1
JohninRedding
Mar 16
"Only one member ofSVB‘s board of directors, Tom King, had a career in the financial industry." This, along with all the other directors being there because they were big time Democrat donor in addition to not having a risk management officer, is what doomed the bank. Americans need to wake up to
the damage lefties are doing to the soul of this country. They need to recognize all the damage is being done intentionally.


2
JohnBeh
Mar 16
Edited
Could it be that Biden is looking at a massive financial crisis in this country? Having Biden in charge is like having the head chef of a fancy restaurant be a monkey. what a messy kitchen!


1

1
Statesrights
Mar 16
Another failure caused by Democrats and their WSP policies. Biden's bail
out of SVB is a bail out for the rich since anyone with 250,000 or less
are covered. Once again the middle class hard workers have to give their
hard earned money to the rich. To top it all off Gov. Newsom ask for a
bail out without disclosing his ties to the bank. A board that has Hillary Clinton Donors on it - sounds like Hunter Biden and Biden family all over again. Biden should really resign. His ties to China, his sons' conduct in
his relationship with China, the border crisis, etc. etc. all this is
enough for him to resign along with the VP.

helgec01
Mar 16
On the surface, the 2008 financial crisis and the mini crisis of
SVB/Signature Bank failures are different EXCEPT the underlying cause is
THE SAME. Liberal (Democrat) social emphasis of the Community Reinvestment
Act on all banks led to the corruption of underwriting standards and, ultimately, the failure of the system. The liberal social emphasis of ESG policy on the two failed banks in 2023, led to extreme corruption of underwriting and risk management by the bank Boards of
Directors/managements as well as the bank supervisors (state and Federal) leading to failure of the banks. Sadly, this emphasis on ESG policy
infects many other businesses as well and poor business performance is
sure to follow.


2
BarbroNygren
Mar 16
Well, the Bankers were not bankers ,but Elite Democrat donors


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