SVB executives, absorbing an inrush of deposits from Silicon Valley techies, decided to invest heavily in long-term bonds without hedging against the risk of higher interest rates, columnist Michael Barone says
As one who has spent pleasant time on Sand Hill Road and the Stanford campus, I’m dismayed by the demands for special treatment coming from the denizens of one of America’s most privileged and affluent precincts.
Sand Hill Road, leading up the hills above Stanford, was the home of Silicon Valley’s first venture capital firms and of a branch of the now-bankrupt Silicon Valley Bank. Stanford, of course, is the home of Stanford Law School, site of the latest silencing of an eminent speaker by “woke” student thugs.
That happened Thursday, March 9, at a Federalist Society event featuring federal Fifth Circuit Judge Kyle Duncan. Such shout-downs of speakers violate law school policy, but none of the six school administrators in the room objected. Instead, the DEI (diversity, equity, inclusion) associate dean, Tirien Steinbach, read an eight-minute prepared statement including criticisms of the judge for threatening “basic rights for marginalized communities.”
Such campus thuggery has become common, notably at Yale Law School (of which I am a graduate) on March 10 last year.
On Friday, the Stanford Law School dean issued an apology but seemed to excuse the DEI administrator by saying, “however well-intentioned, attempts at managing the room in this instance went awry.” On Sunday, the law school dean and the university president issued a more forthright apology, admitting that “staff members who should have enforced university policies failed to do so.”
On Monday, March 13, hundreds of law students lined the halls to intimidate the law school dean for apologizing.
Despite the apologies, no one seems to be contemplating any punishment or sanction for the students or their DEI apologist. The justification, as the DEI dean summarized, is some students’ feelings that “their sense of belonging is undermined” by the judge’s opinions. That echoes the frequent “woke” complaint that speech is violence — of course, asserted by people threatening violence to suppress speech.
Buy why should their complaints be taken seriously? Law students are adults — 21 and older, eligible to vote, marry, own property, drink, smoke and enlist in the military. Why do they have to be shielded by hordes of administrators from speech that hurts their feelings? Adults outside of campuses don’t get free therapy or collusive coddling.
Stanford Law students aren’t the only Silicon Valley denizens granted special treatment this month. Tech executives who were big depositors in Silicon Valley Bank were bailed out by government regulators over the weekend.
SVB’s demise, the second biggest bank failure in United States history, has sparked demands for increased or different banking regulation. Yet it appears that the failure resulted not from weak regulations but from bad decisions by people blessed, like Stanford Law students, with high cognitive ability and ensconced in enviable institutional niches.
SVB executives, absorbing an inrush of deposits from Silicon Valley techies, decided to invest heavily in long-term bonds without hedging against the risk of higher interest rates — something that anyone who reads financial news saw coming. They did so even though 93% of deposits were above the $250,000 limit on Federal Deposit Insurance Corporation insurance. The predictable result was that when interest rates rose, depositors sensed weakness and rushed to yank their uninsured money out — a classic run on the bank.
Where were the bank executives? Preoccupied at least part of the time with “advancing women and Black and Latinx individuals to positions of influence” in their DEI program and funneling $74 million to Black Lives Matter causes. Where were West Coast bank regulators? Dozing off, apparently.
Then last weekend, agencies and Treasury Secretary Janet Yellen announced full and immediate fund access for depositors, even those with millions in deposits uninsured by the FDIC. The special treatment was necessary, it was said, because many Silicon Valley businesses, heedless of the bank’s foolish but publicly disclosed policies, needed the money to meet payrolls for employees in a nationally critical innovative industry. Smart and privileged people were again excused from the consequences of their misdeeds.
Of course, fracking executives in Salena Zito’s western Pennsylvania could make similar claims. If they left millions in uninsured accounts, their losses would hurt employees and throttle an innovative sector of the economy. But they haven’t made their money while young and glamorous, and they haven’t been ponying up big bucks to national Democrats.
What Silicon Valley teaches is that those engaging in “woke” bad behavior — whether it’s “woke” privileged law students shouting down speakers or “woke” privileged bank executives taking obvious and easily preventable risks — can wiggle out of the consequences. That’s not a good lesson for America’s richest regions to teach the rest of the nation.
Michael Barone is a senior political analyst for the Washington Examiner, resident fellow at the American Enterprise Institute and longtime co-author of The Almanac of American Politics.
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