Sen. Ted Cruz (R-TX) is opening a probe into the collapse of Silicon Valley Bank.
The ranking member of the Senate Commerce Committee wants to know, along with the Department of Justice and the US Securities and Exchange Commission, what caused SVB to fail, making it the second-largest bank failure in American history. The tech industry has been taking a beating for nearly a year, with SVB heavily leveraged within that industry. It’s the place for tech startups to obtain loans. Yet, disturbing workplace practices have been revealed since the bank’s failure, namely that they didn’t have a risk assessment officer during the most volatile periods of the tech market. Cruz ripped into the bank, saying they seemed more concerned about ‘woke’ nonsense than sound banking. The Texas Republican also wants to know if the San Francisco FED doled preferential treatment to the bank.
BREAKING: Ranking Member @SenTedCruz launches oversight investigation into Biden’s Big Tech Bailout: https://t.co/vRIRFRMeXP
— Senate Commerce Republicans (@SenateCommerce) March 16, 2023
Things Silicon Valley Bank was interested in:
— Ted Cruz (@tedcruz) March 15, 2023
✅ESG
✅Black Lives Matter activism
✅Climate change
Things SVB was NOT interested in:
❌Risk Management
In his letter to Silicon Valley Bank’s CEO, Tim Mayopoulos, Cruz wrote:
SVB’s conduct raises concerns that it may have been more obsessed with promoting woke ESG practices than following sound banking practices. There is evidence to support such concerns. For example, SVB did not have a chief risk officer from April 2022 to January 2023—an eight month period during which “the VC market was spiraling.” Yet six months after the George Floyd protests began, it hired a chief diversity, equity and inclusion officer to “champion, promote and guide the company’s diversity, equity and inclusion (DEI) strategies for its global workforce.” Moreover, in 2022, SVB changed the name of its Board’s “Governance Committee” to the “Governance and Corporate Responsibility Committee and expanded its oversight of the ESG strategy and program.”
Cruz also wants to know why the SF Fed appeared asleep at the switch when they had all the resources and tools available that could have picked up on the dangers. Did the SF Fed conduct liquidity stress tests on SVB? We don’t know:
“The SF Fed’s failure to address SVB’s obviously risky structure is frankly shocking. As you know, one of the central purposes of the Federal Reserve system is to promote the safety and soundness of financial institutions. It employs a team of over 400 economists, including dozens in the supervision and regulation division. The SF Fed, in particular, has a dedicated fintech team. And until March 10, 2023 SVB’s CEO served on the board of the SF Fed. The SF Fed had all of the resources and information necessary to properly supervise SVB, yet it spectacularly failed to do so.
“Instead of fulfilling its statutory mandate to supervise SVB, the SF Fed has been distracted with engaging in politically-charged research and advocacy on environmental, social, and governance (“ESG”) and diversity, equity, and inclusion (“DEI”) topics, like global warming and racial justice.”
Cruz sent letters to both SVB and SF Fed this week.
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