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Did the Banks ‘Go Woke’ or Just Enjoy Bipartisan Deregulation?
And Ted Cruz’s book publisher photoshops out his mullet
The Right Blames Silicon Valley Bank Collapse on “Wokeness” — But a Few Aren’t Buying It
The collapse of Silicon Valley Bank and Signature Bank at the end of last week threw Washington into a tailspin. The situation was serious enough that the White House and Treasury Department intervened to prevent a bigger financial crisis.
The Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Treasury Department jointly announced on Sunday their plan to maintain confidence in America’s financial system and prevent the banks’ failures from creating larger ripples in the U.S. economy. Bankrate provides a handy summary of what the government is doing:
The FDIC said it would make all depositors who banked with SVB and Signature “whole,” meaning no customer would lose access to their money. Those customers would be able to access that cash by Monday, the agency said;
The Fed introduced a new special emergency lending facility that would offer up to one-year loans at relaxed rates (4.83 percent, as of March 13) to other banks, savings associations, credit unions and depository institutions in exchange for government-backed assets as collateral. Notably, the Fed would accept those assets at the original value, so banks don’t have to sell those assets at a loss.
Removing the “penalty” rate for banks borrowing at the Fed’s discount window.
Meanwhile, many members of Congress took the opportunity to indulge in one of their favorite pastimes—the blame game. Some on the right have identified a convenient culprit for the failures: the banks’ diversity, equity, and inclusion policies and investments in environmentally friendly businesses. In cable news-speak, they failed because they tried to “go woke.”
House Oversight Committee Chairman James Comer aired this sentiment during an appearance on Fox News, saying, “We see now coming out they were one of the most woke banks in their quest for the ESG-type policy and investing. This could be a trend, and there are consequences for bad Democrat policy.” Comer added, “I think we need to keep an eye on all the banking sector right now.”
Florida Governor and prospective presidential candidate Ron DeSantis chimed in, saying on Fox News, “This bank, they’re so concerned with DEI and politics and all kinds of stuff. I think that really diverted from them focusing on their core mission.”
And Republican Senator Josh Hawley posted a sarcastic variation on this messaging theme:
But at least some Republicans know this line isn’t based in fact. Things came to a head Monday evening when Republican Study Committee Chairman Kevin Hern reportedly told Republican members of Congress and their staff on a conference call that they should stop going on television and tweeting about the situation if they’re uninformed on what’s actually gone down at SVB.
Even in the unlikely event that Hern’s fellow congressional Republicans heed his words, there is nothing to stop the right’s most prominent shock jocks from repeating the “woke banks” line. Certainly, nothing has stopped them so far.
During his show on Monday, Tucker Carlson told viewers,
After 2008, the Obama administration . . . swooped in and imposed DEI—diversity, equity, and inclusion standards on the entire financial sector. And that's one of the main reasons our big banks are now increasingly incompetent and also one of the reasons Americans are so divided by race. Ideologues used the 2008 bank bailout to kill American meritocracy. That’s a big step, mostly unacknowledged, but we’re living with its consequences.
Fox News anchor Harris Faulkner hammered in the narrative that SVB’s “woke” agenda was a major culprit in its failure as well, adding, “that’s crazy town.”
“Was there regulatory failure? Perhaps,” Wall Street Journal columnist Andy Kessler intoned on Sunday. But another important vector of the bank’s failure, he alleges, was hiring “the wrong people.”
In its proxy statement, SVB notes that besides 91% of their board being independent and 45% women, they also have “1 Black,” “1 LGBTQ+” and “2 Veterans.” I’m not saying 12 white men would have avoided this mess, but the company may have been distracted by diversity demands.
In response to these claims, some have pointed out that a decade and a half ago the leadership of the major banking institutions was dominated by white men of a certain age, and that didn’t stop the financial train wreck of 2008.
One figure to keep your eye on: Tim Scott, the ranking Republican on the Senate Banking Committee. In a possible indicator of his thinking about how to position himself for a 2024 presidential bid, the South Carolina senator has taken a different line from that of his colleagues.
Instead of jumping on the “SVB failed because it was too woke” bandwagon, Scott has criticized the Biden administration for “corporate cronyism.”
“We just heard recently that they’re going to really have the greatest form of corporate cronyism that we’ve seen in a very long time,” Scott told Trey Gowdy in a Fox News appearance before enumerating some of the administration’s steps to rescue the bank and secure deposits, including uninsured ones. “It sends a very negative statement to the marketplace, and it is something that we’re going to have to wrestle with over the next couple of days as we delve into what actually happened.” As for the cause of the bank’s failure, Scott has a more nuanced view than many of his GOP colleagues: He sees it as a product of bad Fed policy resulting in high inflation, bad management, and poor regulation.
That last part of Scott’s account points to an important bipartisan dimension of the lead-up to the collapse: years of regulatory rollbacks imposed by both parties. In 2018, the Republican-led Congress combined forces with a large share of Democrats to reduce the regulatory burden on small and mid-size banks like SVB, despite warnings from the Congressional Budget Office and others that the legislation would “increase the risk of a financial crisis.” But it seems for at least some, the political calculation is to go with the “woke” line of attack.
Ted Cruz’s Book Publisher Chops off His Mullet
Texas Sen. Ted Cruz is releasing a new book soon, Unwoke: How to Defeat Cultural Marxism in America. The cover art depicts Cruz, of course, but as The Bulwark’s own Jim Swift noticed, it isn’t the natural man. He’s been touched up.
Insider’s Bryan Metzger reports that Regnery, Cruz’s publisher and a sort of clearinghouse of right-wing authors’ books that the major publishers would shy away from, made the decision to nix the senator’s party in the back, shave some of his beard scruff, and give him a slightly darker tan “to match the Senator’s current appearance.”
“To match his self-image” might be a better way of putting it. As someone who sees Cruz multiple times per week, I can confirm he still has a bit of a mullet going. Perhaps it’ll be gone by the time the book tour begins.
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