The fact that Silicon Valley Bank (SVB) has been seized by federal regulators is a big deal and will have a huge impact on Silicon Valley’s startup scene. They are the financial institution for every new tech company in Northern California.
Something is really rotten at SVB. The bank has $209 billion in assets and $175.4 billion in deposits, yet it collapsed because it failed to raise a mere $1.75 billion in new financing. The consequences should ripple across a significant segment of the economy, particularly in the San Francisco-San Jose region.
But whatever, shit happens, right? Economic sectors are disrupted all the time, and this one, at least, should hit a more affluent crowd. We’re not talking the destruction of manufacturing in small towns all across America, and Silicon Valley is resilient enough to bounce back. It always does.
Except this isn’t small-town America. This is some of the wealthiest, most powerful interests in our country. And if there’s one thing wealthy financial interests love more than anything else, it’s privatizing profits but socializing the risks. So like clockwork …
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That’s why I have an irresistible urge to break everything around me.
To his credit, Ackman says in a subsequent tweet that any bailout should protect depositors, “not equity holders or management.” But it doesn’t matter—we cannot have a system that fights tooth and nail (including key Wall Street institutions) to prevent student loan forgiveness, because something something “fairness,” and then champion bailing out Wall Street banks. And in any case, that’s what FDIC insurance is for. If nothing else, that should protect most of the bank’s small depositors. Everyone else? That’s capitalism. You want to enjoy its fruits, then deal with its failures.
We’re told time and time again that government intervention teaches dependency. How do you think it impacts the behavior of Wall Street financial titans if they know any misplaced bets mean the end of their institutions? Right now, the lesson is “you can do whatever the f’ you want, because no matter what, you’re ‘too big to fail.’” That has to end.
If Wall Street fears the consequences of SVB’s collapse, it can take matters into its own hands. It can manage its own bailout of the bank. It can create its own “bailout fund” to support its failed institutions if it thinks their health, as an industry, depends on outside bailouts. It can self-regulate—ha ha ha ha who am I kidding? Heck, Ackman himself is a billionaire. Maybe he can front SVB the $1.75 billion it supposedly needed to survive. He’s worth $3.5 billion. He can afford it.
Instead, we live in a world where hedge fund managers like Ackman pay less in taxes than average Americans. So you and me get to subsidize their day-to-day lifestyle, then we get to subsidize their bad bets, all to prevent other shitty banks making their own shitty bets (watch crypto start making cameos in these bank failures) from going under.
But get your grubby hands off their profits!
Meanwhile several financial institutions have sued the Biden administration, both to stop student debt forgiveness as well as just this week to stop a pause in student loan repayments.
SoFi argues that Biden’s current extension is unlawful because rather than being tied to the pandemic emergency, the administration extended the student loan pause in response to the Supreme Court battle over the administration’s separate student loan forgiveness initiative. That plan could wipe out up to $20,000 in federal student loan debt for millions of borrowers. SoFi argues that the pause has reduced its earnings and profits because far fewer borrowers are interested in refinancing their federal student loans while they have a zero precent interest rate and no payments due.
Who the hell is going to refinance their student loans when interest rates are at over 5%? And you know what, if no one refinances, good. SoFi isn’t owed the unfettered right to suck more life out of student debt holders. Dear God, they’re freakin’ parasites on our system.
F’ them all. F’ them to hell. There’s plenty of money in Wall Street to bail themselves out if they really fear the collapse of their industry. Absent outright nationalization of Wall Street, keep the rest of us out of it.
What do Americans really think about the issues? It turns out they are a surprisingly liberal bunch, as Rachael Russell of Navigator Research tells us on this episode of The Downballot. Russell explains how Navigator conducts in-depth research to fill in gaps in policy debates with hard data instead of pundit speculation. The challenge for Democrats is that many voters say they hold progressive beliefs but still pull the lever for Republicans. That imbalance, however, presents an opportunity—Democrats just have to seize it.
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