Some comments on the collapse of the “woke” banks and a few others. Looks like the “Emperor has no clothes” has morphed into “the Woke Moron has no clothes”
Lots of chatter about the extent of the damage caused by Silicon Valley Bank and Signature Bank’s “woke” policies.
This looks increasingly like these two banks could carry out bad banking when money was free and plentiful. That is with close to(zero interest rates and lots of liquidity sloshing around via the Fed’s debt monetization with fiat money printed via a keyboard.
Now the liquidity tide is going out, they have been revealed as incompetent and imprudent.
There are also claims of corruption and ties to China and the WEF
Here’s a few headlines:
Report: Nearly Half of 'Climate Change' Companies in U.S. Banked with Failed SVB (breitbart.com)
Biden's Bailout of SVB Saved China, Gavin Newsome, Buzzfeed, VOX and BLM | The Gateway Pundit
Newsom Failed to Publicly Disclose SVB Ties While Lobbying for Bailout (businessinsider.com)
Get Woke, Go Broke? It's Time To Talk About SVB's Ties To The World Economic Forum - Alt-Market.us
The Breitbart article quotes Kimberly Strassel of the Wall Street Journal,
Did ESG Help Sink SVB? - WSJ who in turn quoted someone else:
“They’re basically subprime business loans. You’re talking about companies that have no credit profile, they’re burning cash and are unlikely to raise the same type of capital because of interest rates. . . . It was basically social credit.”
What has piqued my interest are the references to BLM. Why would a bank and its employees hand over 73 million bucks to BLM over 12 years?
From the Gateway Pundit article:
“Silicon Valley Bank and its employees contributed more than $73 million to the Black Lives Matter movement and related causes since 2020, according to a database maintained by the Claremont Institute.”
Of course, Gavin Newsom is involved. He insisted that the Fed, the Treasury and the Biden Administration bailed out SVB – because he had a lot of money on deposit with SVB.
From the Business Insider link:
“California Gov. Gavin Newsom’s (D.) trio of wineries are clients of the failed financial institution, as is the governor himself. He has maintained personal accounts at the failed bank for years, the Intercept reported, citing a former Newsom aide. Newsom’s efforts to rescue Silicon Valley Bank’s clients could also put him on the wrong side of the law. California law prohibits elected officials from influencing official matters in which "the official has a financial interest,"
I have my suspicions that all of Newsom’s business interests will be outed as a giant money laundering scheme involving the Chinese. Remember this?
Newsom won’t share details on $1B mask deal with China | Fox News
Not sure why anyone would think that a Chinese car component manufacturer would be able to produce quality masks. Sort of like why anyone would think that a Chinese pharma company with junk bond ratings, Fosun Pharma, should supply the contents of vials for C19 mRNA injections to Pfizer/BioNTech?
Elsewhere, UBS took over CSFB, conjuring up images of a weak swimmer trying to rescue someone else drowning and flailing arms all over the place.
Don’t worry though. The Swiss banking system has worked a nifty ploy for decades, making the plight of these two swimmers somewhat trivial.
To suppress the appreciation of the Swiss Franc that would make its exports uncompetitive, the Swiss National Bank has been selling Swiss Francs and buying lots of equities all over the world.
See page 5 of 9 here:
Annual result of the Swiss National Bank for 2022 (snb.ch)
A little chump change amounting to the odd 880 billion Swiss Francs – 950 billion US dollars and that is after losing the odd 175 billion Swiss Francs over calendar year 2022! Not bad for a country of some 8.8 million people – 108,000 in printed fiat exchanged for “assets” for every man, woman and child!
Brings the value of the merged UBS/CSFB bank of around 60 billion Swiss Francs into focus, right?
One final piece of banking news from the US.
From here:
“First Republic Bank (FRC) got a $30 billion lifeline from some of the nation's biggest lenders, including JPMorgan (JPM), Citigroup (C) and Bank of America (BAC), and Wells Fargo (WFC) each of which poured in $5 billion each.
Goldman Sachs (GS) and Morgan Stanley (MS) provided $2.5 billion each while BNY Mellon (BK), PNC Bank (PNC), State Street Corp. (STT) put in a billion dollars each.”
No detail on how much FRC was exposed to any collapsed bank or other banks in trouble.
Nice to have that sort of chump change lying around. Of course, they simply tapped the Fed – borrowing at the Fed Funds rate of around 4.5% to 4.75% and lending to the vulnerable First Republic Bank at around 6.5%.
FRC no doubt will either pass on the increased cost of funds to its loan customers or doesn’t need to because it already charges them 8-12% for car loans, housing loans and credit cards etc.
Watch out for a quarter point increase in the Fed Funds
Onwards!
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My understanding is that the US Treasury (the taxpayers) did not bail out the SVB bank, but its wealthy depositors, whose $ was uninsured. The bank went under but the venture capitalists’ millions needed to be restored to them. I have no problem with wealth but I don’t like paying for others’ mistakes or lack of due diligence. Anyone else tracking with me?