Silicon Valley Bank

Thursday

Spectator Editorial

Make tech great again

Mark Zuckerberg has dubbed 2023 Meta’s “year of efficiency.” The slogan is a corporate euphemism for layoffs, of course — and not an especially subtle one. Zuckerberg’s company has parted ways with tens of thousands of employees this year. Other tech firms are following suit. Crunchbase estimates that US tech firms fired more than 118,000 employees in the first quarter of 2023. These are lean times in Silicon Valley — and, as Joel Kotkin explains in this month’s cover story, there is more to this tale than Big Tech belt-tightening after a pandemic-era hiring spree. The Valley, Kotkin explains, is in trouble. A place that America, and the world, once looked to for an ambitious and optimistic vision of the future, has grown sclerotic.

tech

Wednesday

Matthew Foldi

Maxine Waters spews up ‘dog whistle’ talking points at SVB hearing

Democrats are taking today’s Silicon Valley Bank and Signature Bank hearing seriously. So seriously that they circulated an emoji-filled document of suggested tweets that they would like for committee members to post. The saddest part is that one of those committee members then repeated those talking points almost word-for-word at the hearing. “Democrats 👏 the decisive action taken by the Biden administration in a critical moment to restore confidence in our banking system,” the Financial Service Committee Democrats circulated in a memo obtained by The Spectator this morning.

maxine waters talking points

Thursday

John Steele Gordon

The last banking crisis and its architects, Dodd and Frank

The Dodd-Frank law, enacted in 2010 following the financial crisis of 2007-08, was named for two of its chief architects, Senator Chris Dodd, Democrat of Connecticut, and Representative Barney Frank, Democrat of Massachusetts. It's ironic that both had been involved, politically or personally, in exactly what had caused the financial crisis in the first place. In the 1930s, only about 10 percent of American non-farm families owned their own homes. But that began to change with the New Deal. The Federal Housing Administration was established in 1934 to guarantee mortgages, making banks much more willing to initiate them.

Monday

Oliver Wiseman

Powell pays for past mistakes

Powell pays for past mistakes In the summer of 2020, Fed chair Jerome Powell could not have been clearer. “We’re not thinking about raising rates,” said Powell, before doubling down: “We’re not even thinking about thinking about raising rates.”   Things, as we now know, turned out a little differently. The months marched on, and with the Biden administration determined to spend, spend, spend, inflation went from “high class problem” to “transitory” to the biggest problem facing the US economy. Powell and his Fed colleagues went from not thinking about thinking about raising rates to, well, raising rates. From virtually zero around this time last year to 4.75 percent as of January.

jerome powell

Thursday

Om Malik

Why SVB was more than just a Big Tech bank

Silicon Valley has finally started to breathe easy, though not too easy. It has been a tense few days for everyone in the technology industry. Startup founders, their employees, their investors, lawyers, accountants, doctors, and countless others who make a living from the innovation ecosystem have been suffering from collective apprehension. The culprit was the seemingly sudden failure of Silicon Valley Bank, or SVB, as it was known around Silicon Valley. SVB, which started as a small regional bank in 1983, transformed itself into a technology-focused bank in the early Nineties. Its rise reflected the growing fortunes of the technology industry at large.

Wednesday

Batya Ungar-Sargon

Biden will never let Silicon Valley fail

After a bank run on Silicon Valley Bank left the institution in ruins, the Federal Reserve announced it would make whole the bank’s customers, including those with uninsured deposits in excess of $250,000, which should have made them ineligible for the Deposit Insurance Fund. President Biden promised the American people that this was not a bailout because no losses would be borne by taxpayers — a claim the Wall Street Journal assessed as a “whopper.” But the debate we should be having is not over the definition of the authorities' actions, but how to judge them morally — especially given how the Fed has been trying to tame inflation for the past two years.

Monday

Oliver Wiseman

SVB’s collapse and the echo of 2008

SVB and the echo of bailout politics There was a back-to-the-noughties feel to events in Washington this morning as Joe Biden sought to calm markets and assuage fears of contagion in the banking system after the collapse of Silicon Valley Bank in the last few days. Talking the day after regulators announced emergency measures that guaranteed all depositors at Silicon Valley Bank, Biden said that “thanks to the quick action of my administration over the past five days, Americans can have confidence that the banking system is safe.” Viewed as a stand-alone case, Biden’s response to a run on America’s sixteenth largest bank after mismanagement left it fatally exposed to higher interest rates is understandable.